Entity Choice Generally

If I’m the only member of my LLC, do I really have liability protection?

Yes. Well, you have the same liability protection as a multi-member LLC. There will be some specific exceptions. For example, if you are personally negligent or you are responsible for your company's payroll tax obligations, then you'll be exposed to personal liability. But being a single-member LLC won't change that. There may be instances where being in a partnership may change an outcome in an insolvency situation and certain specific other circumstances.

July 10th, 2016|0 Comments

When I form my corporation or LLC, is that a license?

No, but thanks for asking a weird question. You’re likely getting confused with some industries, like talent management, that may require you to obtain a license from a particular state agency. The formation of the entity doesn’t trigger automatic licensure, nor does it automatically require you to get a license for your business. Licensure for your business is separate and apart from forming an entity. And, in some instances, if you are required to obtain a license, that may dictate the kind of entity your form.

June 15th, 2015|0 Comments

Will putting my personal residence into an LLC protect it from my creditors?

Sorry, but . . . LOL – no. People do try this, though. The purpose of an LLC, and therefore what it ultimately protects, by law, is the business that’s operating inside it. Unless you have turned your personal residence into a business (not really a personal residence anymore), then it’s not protectable this way. However, one of the main reasons people put their business into an LLC is to protect their personal assets, like their home. Nice try, though.

June 15th, 2015|0 Comments

Can any corporation be an S Corporation?

Any corporation can be an S Corporation, unless it doesn’t meet certain criteria. For example, an S Corporation cannot be owned by another corporation, with certain very narrow exceptions. And sometimes you don’t want your corporation to be an S Corporation, for example, when you are seeking VC investments.

July 12th, 2015|0 Comments

Why is an S Corporation called an S Corporation?

S = “Small”, and, yes, that’s per the Internal Revenue Code.

July 12th, 2015|0 Comments

What are the downsides of using an S Corporation?

First, please take a look at this FAQ. Once you understand why you may want to use a C Corporation, you’ll understand several of the reasons that an S Corporation may not work for you. Next, other downsides include not being able to have more than 100 shareholders, and not being able to have non-individual [...]

August 9th, 2020|0 Comments

How can I get my LLC to be taxed as a partnership?

Whew! A good question with a simple answer. When an LLC is formed with two or more members, it’s automatically taxed as a partnership. That’s it!

April 8th, 2020|0 Comments

Can partners in a partnership get a W-2 and be “treated like an employee” like they can in an S Corporation?

Short answer: No. Long answer. When you turn one of your employees into a partner, that individual will switch from receiving a W-2 to getting a Schedule K-1. If you want your “partners” to be treated like an employee, then an S Corporation is the preferred approach (after you’ve determined that a C Corporation is [...]

August 9th, 2020|0 Comments

Is my business big enough to justify the additional overhead of a corporation or LLC?

“Big” is a relative term. Size isn’t always the only, or even a significant, element to determining whether you should entity-ize your business. If you run a small business, but it’s a high-risk business, like, for example, a liquor store, then an LLC or corporation is probably a good idea, regardless of your revenue.

July 12th, 2015|0 Comments

What are the advantages of a C Corporation versus a sole proprietorship?

Short question . . . long answer. For the most part, the classic answer, which is also correct, is a C Corporation (or an S Corporation) provides limited liability for its owners and management. An S Corporation could provide additional tax benefits. On a less obvious level, having your business in a corporation may provide it with more “respect” in the business community, and may fend off nuisance suits.

July 12th, 2015|0 Comments