What is a good reason to form an LLC?

With an LLC, only the assets owned in the name of the LLC are subject to the claims of business creditors, including lawsuits against the business. The personal assets of the LLC members cannot be claimed to satisfy business debts. For most people, this is the most important reason to form an LLC.

Why would I want to be an S Corp?

S corp tax status is an attractive choice because it offers liability protection and tax savings while making it easier to transfer business interests. This federal status allows S corporation shareholders to avoid double taxation on any corporate income. S corp owners also receive limited liability protection.

What is the main advantage of choosing an LLC or Subchapter S status?

S corporation advantages include: Protected assets. An S corporation protects the personal assets of its shareholders. Absent an express personal guarantee, a shareholder does not have personal liability for the business debts and liabilities of the corporation.

What are the pros and cons of an S corporation?

A little insight into the pros and cons of becoming an S Corporation may help in your decision-making process.

• S Corporation.
• No Corporate Tax for S Corporations.
• Reduced Taxable Gains.
• Ability to Write off Start-up Losses.
• Offers Liability Protection.
• Limited to One Class of Stock.
• Less Attractive to Outside Investors.

What can you write off as an S Corp?

S-Corp Tax Deductions Ordinary business expenses such as rent, taxes, advertising, company-provided employee benefits, depreciation and interest can be subtracted from profits and income to arrive at the net income for the business. If this net income is negative, it is passed through to shareholders as a deduction.

What are the pros and cons of an S-Corp?

What are the advantages of a subchapter S corporation?

One major advantage of an S corporation is that it provides owners limited liability protection, regardless of its tax status. Limited liability protection means that the owners’ personal assets are shielded from the claims of business creditors—whether the claims arise from contracts or litigation.

Why would you choose an LLP over an LLC?

Similar to the LLC, the LLP is a hybrid of both the corporation and partnership, to give the greatest advantages for taxation and liability protection. The LLP is not a separate entity for income tax purposes and profits and losses are passed through to the partners.