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The best part about launching a business today is you can submit most paperwork online. This includes the most important paperwork of all: filing to create your business entity, whether it’s an LLC, an S Corp, or a standard C Corp.
The process is easy, but before you submit your documents, make sure you contact an attorney for the following reasons:
1. You Might Form The Wrong Type Of Entity
While the option exists to form any type of business entity you want, some entities are a better option than others. For example, if you’re a freelancer or solopreneur, it doesn’t usually make sense to form a corporation. The initial filing fees might be cheaper than an LLC, but maintaining a corporation will unnecessarily complicate your life.
Both S Corps and C Corps require formalities like meetings, reports, and officers. This is to protect shareholder assets. If your C corporation goes bankrupt, and you didn’t maintain formalities, your personal assets might become fair game to creditors. If you form an S Corp, the IRS could end up putting you under a microscope to see if you’re misclassifying dividends as wages in order to pay lower taxes.
An LLC, on the other hand, is perfect for most freelancers, solopreneurs, and some small businesses with multiple owners. As Incfile explains, an LLC is simpler and more flexible than a corporation. There are no required formalities. The LLC business structure has the pass-through taxation of a partnership, and the limited liability of a corporation. Owners are referred to as members. An LLC is the most popular option among the 42 million independent contractors in the U.S.
It usually costs less than $300 to form an LLC and get a taxpayer ID number. If you’re the only owner, income is reported to t… Read More
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