How to Choose the Right Business Type: LLC vs. S-Corp

If you and your partners don't spell out your rights and responsibilities in a written partnership agreement, you'll be ill-equipped to settle conflicts when they arise, and minor misunderstandings may erupt into full-blown disputes.

A partnership agreement allows you to structure your relationship with your partners in a way that suits your business. You and your partners can establish the shares of profits each partner will take, the responsibilities of each partner, what will happen to the business if a partner leaves, and other important guidelines.

Slowly becoming more as a standard for businesses, a Limited Liability Company (or LLC) is a hybrid business form which combines the liability protection of a corporation with the tax treatment and ease of administration of a partnership. The LLC is America’s newest form of business organization and is the most popular form of business.

Unlike shareholders in a corporation, LLCs are not taxed as a separate business entity. Instead, all profits and losses are "passed through" the business to each member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership would.

You should file the following tax forms depending on your classification...

Great overview of how to form a Limited Liability Company (LLC).

A corporation is the most common business structure. A corporation is an independent legal entity owned by its shareholders. This means that the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs.

Corporations are more complex than other business structures because they tend to have costly administrative fees and complex tax and legal requirements. Because of these issues, corporations are generally suggested for established, larger companies with multiple employees.

A corporation is formed under the laws of the state in which it is registered. To form a corporation you’ll need to establish your business name and register your legal name with your state government.

State laws vary, but generally corporations must include a corporate designation (Corporation, Incorporated, Limited) at the end of the business name.

To register your business as a corporation, you need to file certain documents, typically Articles of Incorporation, with your state’s Secretary of State office.

An S Corporation is a special type of corporation created through an IRS tax election. An eligible domestic corporation can avoid double taxation by electing to be treated as an S Corporation.

To be considered an S Corporation, you must first form a business as a C Corporation in the state where it is headquartered. S Corporations are "considered by law to be a unique entity, separate and apart from those who own it." This limits the financial liability for which you (the owner, or "shareholder") are responsible.

If you want to form an S Corporation, you must first file an Articles of Incorporation with your state’s Secretary of State to create a C-Corporation.

A partnership agreement allows you to structure your relationship with your partners in a way that suits your business. You and your partners can establish the shares of profits each partner will take, the responsibilities of each partner, what will happen to the business if a partner leaves, and other important guidelines.

If you and your partners don't spell out your rights and responsibilities in a written partnership agreement, you'll be ill-equipped to settle conflicts when they arise, and minor misunderstandings may erupt into full-blown disputes.

To run your business legally, there are certain federal and state licenses and permits you will need to obtain. These resources will help you understand the requirements for your small business.

Federal Licenses and Permits -- Certain businesses, like ones that sell alcohol or firearms, require a federal license or permit. Find out which ones impact your business and how you can comply. If your business is involved in activities supervised and regulated by a federal agency – such as selling alcohol, firearms, commercial fishing, etc. – then you may need to obtain a federal license or permit. Here is a brief list of business activities that require these forms and information on how to apply.

In addition, you can also discover which general business permits, licenses and registrations required by your state, county or city.

State Licenses and Permits -- Some states have requirements for specific businesses. Find out what business licenses and permits you need in your state. Starting a business? Confused about whether you need a business license or permit? Virtually every business needs some form of license or permit to operate legally. However, licensing and permit requirements vary depending on the type of business you are operating, where it’s located, and what government rules apply.

To help you identify the specific licenses or permits your business may need, simply select a state from the list below to learn about specific license and permit requirements in the area where your business is located.

An eligible entity uses this form to elect how it will be classified for federal tax purposes, as:

• a corporation,
• a partnership, or
• an entity disregarded as separate from its owner.

This set of instructions will help you form your own S Corporation.

A corporation or other entity eligible to elect to be treated as a corporation must use Form 2553 to make an election under section 1362(a) to be an S corporation. An entity eligible to elect to be treated as a corporation that meets certain tests discussed below will be treated as a corporation as of the effective date of the S corporation election and does not need to file Form 8832, Entity Classification Election.

The income of an S corporation generally is taxed to the shareholders of the corporation rather than to the corporation itself. However, an S corporation may still owe tax on certain income.

This form is used to change your C Corporation to an S Corporation for special tax treatment.

One of the most important steps in getting your small business off the ground is choosing the right ownership structure for your needs. These series of links and sources will further help you choose the correct business type.

Are you thinking of starting your own business but don't know where to start?

So you have a great idea for a business but you don't know where to start. If you find yourself on this page, that means you have already taken the first step toward starting your business.

On this page, we will lay out the first 4 steps in starting a business...

Incorporating your company is one of the most important processes to complete for your company’s future.

Researching all about incorporating companies has led me to one simple conclusion. Incorporating your company in essence is simply legitimizing it for the rest of the world. There are many reasons to incorporate the first being the removal of personal liability for the owners.

Before incorporating, all of a company’s liability falls on the owners of that company. So if someone decided to sue your company for negligence (hopefully that will never happen), you as the owner would be personally responsible for the outcome of that suit.

One of the first considerations for business owners after starting a new business is deciding where to incorporate.

When forming a corporation, you must decide whether to incorporate in your home state or in another state. While the answer is typically in your home state, some factors may sway you to incorporate in another state.

Deciding where to incorporate and starting the incorporation of your business are important steps in the success of your business. To ensure that your business complies with legal requirements in the state you wish to incorporate, you should consult with an experienced business lawyer.

California is one of the most popular states for LLC and Incorporation formation in the US. Having the largest population in the country, California is a thriving business hub for entrepreneurs and the business community.

Here are the basic steps to incorporating a business in California.

An Employer Identification Number (EIN) is a number is assigned by the IRS and used to identify taxpayers that are required to file various business tax returns. The Employer Identification Number is your permanent number and can be used immediately for most of your business needs, including: opening a bank account, applying for business licenses, filing a tax return by mail.

If the principal officer is a foreign (no legal residence or principal place of business in Untied States), then he or she does not have a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN). In this situation, the following process should be followed...

As a business owner, you face many decisions when it comes to starting, running, and growing your business.

One of the first decisions you will face as a business owner is the decision to incorporate your business. The standard corporation, also called a C corporation, is the most common business structure . A corporation is a separate legal entity owned by its shareholders, thereby protecting owners from personal liability for corporate debts and obligations .

Here are the top 5 benefits of incorporating your business...

Among the many reasons that worry startup entrepreneurs today, who are in the process of starting a small business or are already running a business is whether they actually need a business lawyer. The answer to this question is simple. Hiring a lawyer is crucial to any successful business!

When starting up a small business, there are two professionals that the business will be in dire need of. An accountant, and a lawyer. The reasons behind an accountant are pretty obvious, and this post won’t get into that, however, the reason for hiring a lawyer, might not be so apparent.

Question #1: How do I reserve my company name in Los Angeles?

Question #2: How do I apply for a Federal Employer Identification Number (EIN)?

Question #3: How do I Register for a State Sales Tax and Obtain a Sellers’s permit?

All of these questions answered inside!

A clear summary of everything we covered in this course, covering the main lessons we learned about Sole Proprietorship, Partnership, Limited Liability Company (LLC), C-Corporation, and S-Corporation.

How to contact me to ask questions & discounts on future courses.

Are you an entrepreneur, online business owner, or small business owner? Are you confused about how to start your business? Do you want to know the difference between a Sole Proprietorship, Limited Liability Company, or Corporation?

This course is a comprehensive overview to help you understand the differences and advantages and disadvantages of the most common business types, including: Sole Proprietorship, Partnership, Limited Liability Company LLC, C-Corporation, and S-Corporation.

Most people are surprised to find out that you don't need a business lawyer to choose and form the correct business structure for your business. You can easily create your own Limited Liability Company LLC or Corporation which we will go over in detail in this course.

By the end of this course, you’ll be well-equipped to know which business type is right for your business, how to form and create your desired business, and have a business lawyer answer any questions you may have about starting your business by just enrolling in this course.

For less than the cost of one-hour of legal work, you’ll be in great position to start your business and save money on a business lawyer.

★ Student review by David M. O'Neill, “The information provided is quite valuable to anyone considering incorporation of some form. Obviously, more research is needed to make final decisions and this material and training will make that process easier."

★ Student review by Mi Tay, "It is easy to understand and a student can readily compare and contrast the best business entity set up that is appropriate for their needs. The course describes the pros/cons of each type of business from personal and tax liability aspects. Very good reference."

► WHO AM I?

My name is Sam and I’m a business lawyer in Los Angeles who represents entrepreneurs, creative artists, and business owners with their new and existing businesses.

As a business owner and entrepreneur for over a decade, I have found the legal aspect of business to be daunting and confusing. After consulting and teaching business law for many years, I decided to combine my passion in video production and teaching to create online courses to make the legal aspects of business as easy and approachable as possible.

I have a strong passion in sharing my secrets and I hope to inspire you to succeed in your business. I know your time is valuable so I don’t fill up my courses with useless jargon — you only get the necessary information you need to succeed.

Sign up and find out for yourself why so many people are taking and recommending my courses!

► WHY DO I NEED TO TAKE THIS COURSE?

The most important step in getting your small business off the ground is choosing the right ownership structure for your needs.

As a business owner, you face many decisions when it comes to starting, running, and growing your business. This course is designed to illustrate your business options and help you decide what structure your business will take.

Whether you’re deciding between a Sole Proprietorship, Partnership, Limited Liability Company LLC, C-Corporation, or S-Corporation, this course will clearly explain the advantages and disadvantages of each one, what the incorporation process entails, and your post-incorporation requirements — such as filing annual statements with your state of incorporation.

Your choice of business structure should be informed by a thorough and honest appraisal of your company, and of your own strengths and weaknesses as an owner.

You can also save money on not having to hire a business lawyer. By taking this course, you don’t need to consult a business lawyer when you’re starting a business. Knowing how how to start your own business will save you a lot of time and money.

► COURSE TOPICS

• Sole Proprietorship - What is it and Advantages & Disadvantages
• How to Form a Sole Proprietorship
• Partnership - What is it and Advantages & Disadvantages
• How to Form a Partnership
• Limited Liability Company (LLC) - What is it and Advantages & Disadvantages
• How to Form a Limited Liability Company (LLC)
• C Corporation - What is it and Advantages & Disadvantages
• How to Form a C Corporation
• S Corporation - What is it and Advantages & Disadvantages
• How to Form an S Corporation
• Deciding Between C Corporation and S Corporation
• Clear step-by-step guide on how to form each common business type so you can get started on your business

★ COURSE BONUSES ★

• Sample Partnership Agreement - you will need to use a Partnership Agreement between yourself and your other business partners to form a partnership.
• Resources to Obtain Business Licenses & Permits - To run your business legally, there are certain federal and state licenses and permits you will need to obtain. These resources will help you understand the requirements for your small business.
• Small Business Legal Compliance Inventory Checklist - checklist that will help you determine if your company is sufficiently legally protected in different areas of business concerns.
• Form 8832 Entity Classification Election - a business may use this form to elect how it will be classified for federal tax purposes.
• Form 2553 Election by a Small Business Corporation - An eligible C Corporation may use this form to elect to be classified as an S Corporation for tax benefits.

What makes this course unique is that it’s a comprehensive course on everything you need to know about choosing the correct business type and getting started on your business.

Don’t worry, it’s clear and simple.

► WHAT YOU GET

• Over 17 video lectures clearly explaining each common business type and step-by-step instructional video teaching you how to form your business!
• Lifetime access, ask questions, and see the newest information available about choosing the correct business structure!
• Avoid paying a business lawyer upwards of $350 an hour for general legal advice
• Quick actionable resources and links to help you start your business
• Ask me, a business lawyer, questions directly. I’ll be updating the content of this course based on your questions. By enrolling in this course, you’ll have the opportunity to ask questions and get personal feedback.
• Certificate of Completion
• Discounts on future courses
• 30-Day Money Back Guarantee. If you are not completely satisfied with my course for any reason whatsoever, I will offer you a full refund. No questions asked.

Thank you for making this the best selling business structure course on Udemy! I show my gratitude by consistently making new lectures and answering your legal questions in the course discussion!

What are you waiting for? Every day you wait is costing you money!

Don’t forget that this course is covered by Udemy’s 30-DAY MONEY BACK GUARANTEE - so you don’t have anything to lose.

Legal Disclaimer -- please review before you finish this course.