LLC vs S Corp vs C Corp | Which Business Entity Should I Choose
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- čas přidán 29. 06. 2024
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Are you trying to decide which business entity to choose, between Limited Liability Companies (LLC), S Corporations, and C Corporations?
There are two overall issues - which legal entity is right for your small business, and which tax status is appropriate. In this video I share the many factors you should consider when selecting a business entity for your company, and which entity is right for what situation.
00:00 Intro
01:35 LLC vs Corporations
05:37 Tax Status: Sole Proprietor/Partnership vs S Corp vs C Corp
11:03 Bottom Line: What’s the Right Entity for You?
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#businessentity #llc #scorp #ccorp
Wow FINALLY someone who actually KNOWS what they are talking about and conveys it SUCCINCTLY. What a breath of fresh air!
Glad you enjoyed it!
I agree 😊.
Okay, I love the way you emphasize how it is being broken down between the structure and how it will be taxed. Perfect!
Glad it was helpful, good to hear!
This video was incredibly helpful in my understanding how an LLC is different than an S-Corp. I also wanted to know how to pay myself if I go to S-Corp, and you touched on that, too.
Thank you!
Great to hear, you're welcome!
Thank you for sharing this vital information. I really needed it 😊.
So glad!
Thanks so much for the education and information! This was very succinct and easily understandable.
Welcome!!
Very, very helpful! Thank you for making this!
welcome!
Thanks for explaining in simple words!
Glad it was helpful!
What a great video! Thanks for the info
Welcome!
New subscriber. Enjoyed this CZcams tutorial. I plan on establishing my own business in 2023/2014, and researching the pros/cons of a C-corp.
Thanks for subscribing, good luck with your new business!
great info very clear thx
Glad it was helpful!
Thank you for answering question in advance
Thanks. Very nice breakdown.
You're welcome!
Awesome video.Just subscribed!
Glad you liked it - thanks for subscribing!
Thanks for this video
Welcome!
Thanks for this!
Sure thing!
Great video!
Thanks!
Super helpful thank you
Welcome!
Very informative thank you
Thank you for this video
we open a corp company with out searching well, now we want to change the name of the company and maybe change it to llc. would you recomment me to do that or just close this company and open a new one ??
You can change the name just by a filing with the state (usually called an "amendment" to your incorporation documents) - that's pretty straightforward, then just need to change the name in your other places (banking, etc.). If you want to change from a corporation to an LLC, if you are already operating the business it makes sense usually to convert it with the state. If you haven't operated yet, might be easier to just shut it down (but if you are in California watch out for $800/year franchise fee - depends upon how long the corporation has been existing).
Excellent exploration
Welcome!
Best video I’ve come across.
Glad you think so!
If you have a one-owner business and are considering whether you should stay a sole proprietorship or form an LLC, here's the video to watch: czcams.com/video/5ClAJYWTLRA/video.html
LLC offers much more protection than a sole on personal assets.
You are a life saver ❤️ 🙌
great to hear :)
Much appreciated
welcome!
Great vid
Thanks!
Thank you so much for all videos, I watched a lot of videos but your videos are the best.
I will start business online and maybe in future it'll be visual.
My DBA still in process in Santa Clara county.
Can I change in future from DBA to S Corp?
Yes you can change from a DBA to an S-Corp - many small businesses do that when they are making more income.
Thank you. What I missed here is some visualization in order to be able to follow.
Good point! Yes I do plan to add more visuals / graphics in the future -- I agree they are also helpful to me in understanding and retaining information.
Hi Elizabeth, thanks for a very informative video. I'm planning to start a small home building company and have heard advice from C corp and S Corp and now really hearing this about LLC for the first time. I would not be an actual contractor but a subcontractor managing the process. Any suggestions for a recommended structure? Previously I was thinking S Corp but LLC sounds simpler but then you said it's easier to get credit with an S Corp or c Corp structured as an S Corp.
Hi Elizabeth. Thank you for making such great content. I wanted to know if it's a better option to elect to pay taxes as an S Corp with an llc than opening a new S Corp
All things being equal I usually recommend an LLC that is taxed as an S Corp, because less required paperwork and more flexibility
Thanks
You're welcome!
You're amazing, thank you! Which costs less to form and maintain in California, a Corporation or an LLC?
Hm an LLC is a bit less expensive, but not by much (both have the $800/year franchise fee).
Thank you. I just opened an S Corp but I think I should have done C. I really only want to pay myself in Shares. I'm so new, I'm thinking of switching.
I’d recommend speaking with a tax person to make sure it makes sense for you
Hi Elizabeth, thank you for the amazing video. From my perspective being a foreign national residing outside the USA. Would it make more sense to go down the c corporation route that offers better legal protection vs. an LLC in Delaware?
The C Corp is best in certain tax situations and also if you are looking to go public or get outside investors. But many of my foreign clients go with a corporation because they are not comfortable with an LLC (since they don't have that in their own country)
Hi Elizabeth, I love your videos, thank you! Is there any way I could ask you something personally, meaning do you have a website? Thank you!
You can check out elizabethpw.com
for a solo business owner, which would be best? For a small landscaping business for example. & Awesome video btw
Typically for something like a landscaping business I'd recommend an LLC. Also gives you flexibility so if/when you are making more money and need more sophisticated tax planning, you can change it to an LLC-taxed-as-an-S-Corp.
Hello! Love all your videos, very helpful. I do have one question, I am a Creative Producer in CA, I provide creative consulting to my clients as well as work as a event and video producer. I have been working as a sole-proprietor but I want to file as an S-Corp for this year. Is it better to form a Corporation and elect as an S-Corp or file an LLC and elect as an S-Corp?
Generally I recommend an LLC that elects S Corp because an LLC is easier to run with fewer legal requirements (like having an annual directors meeting with minutes).
Great presentation in such a clear manner! Thanks. One question. As a physician in Calif who is going to work as a1099 independent contractor, I plan on electing to file as an s corp. Does it make a difference if I incorporate as an LLC or Pc? My reading from the sec state website and your video is that a physician can’t do an LLC, is that correct?
Right, you can't practice medicine with an LLC. So you select professional corporation
Thanks For the great Advice,
I have a transportation business like Limo and Car Service, what do you recommend?
It really depends on many factors (that I talk about in the video), not just the type of business
Hello Elizabeth. Thank you for the video it was great. If I was looking to start an investment firm what do think would be the best LLC, s-Corp, or c-Corp? Thank you.
For most people, it works to start out as an LLC and then switch your tax status to LLC-taxed-as-an-S-Corp (if you qualify) once you are making a certain level of revenue.
Thank you! for all the information. I am opening a small business in California as an LLC but will be filing taxes as an S Corp. Can I still manage my small business as an LLC or will I be required to have a board of directors, hold meetings, record minutes, etc...? Appreciate your feedback. Thank you!
Great question - you manage it as an LLC for the most part. The only difference is for tax related things, where you file S Corp tax returns and distribute profits (via salary and distributions) per the S Corp rules.
Your video was precious, and I have a question about S Corporation compared to LLC. Does it protect the individual owner, and is it better than LLC in terms of paying taxes, according to the articles I read. Do you think Amazon S Corporation is suitable for business?
An LLC and an S Corporation both protect the owner. Yes you can save money on taxes with an S Corporation, but that only happens if you are making enough money to take advantage of it (usually in the high five-figures of profit), because an S Corp has additional costs in the complexity of it. If you are just starting out, an LLC may be better (that you can elect for it to be treated as an S Corp later).
Hi Elizabeth! Thanks for making this video. It was very informative. If an LLC has contractors as employees (1099), would an S corp be ideal?
Make sure you never refer to your contractors as employees -- if they are "employees" you can't use the 1099 to pay them -- you'd need to run traditional payroll to pay them. But to answer your question, assuming you are an LLC, you'd need to run the numbers (or have a tax preparer run them) to see if the tax status savings of an S Corp makes sense in that exact situation.
@@ElizabethPW help me setup art gallery
Thanks for breaking it down to plain English Elizabeth. Selected C-Corp based on the fundraising BUT the implications for founders that are non US residents are not clear, what are the top practical considerations?
Well mostly it will be around money stuff -- getting a bank account, paying yourself, and taxes. For example, many banks require you to open an account in person (not all of them, check out mercury.com/ ). Also, if your country does not have a tax treaty with the US, your salary / payouts may be subject to tax withholdings (like 30% - you can file a tax return to try to get that back but meanwhile they take out the money).
HI Elizabeth, I learned from your video that you can classify your business as an LLC but still file as an S-Corp. What are the advantages of doing this versus classifying and filling as an S-Crop?
The tax classification as an S Corp is about taxes -- if you are making enough profit, you can pay yourself part a salary (regular payroll taxes) and then part distributions (income tax but no fica/self-employment tax).
Hi Elizabeth, great video. My question I am starting a new business filed as an LLC. My business will have at least one employee working 30 to 40 hours weekly. I will continue my corporate job to help fund some upstart costs. My business will continue to grow by adding 2 to 3 people over the next 6 months. Since I will not be getting paid through the LLC is an S Corp a good option since payroll will be issued for future employees?
Hm I don't see having the LLC be taxed as an S Corp to be particularly helpful when the business is not making a profit. It really only makes sense to have an LLC be taxed as an S Corp when there is enough profit to make tax planning a big savings. Either way, any profits will be allocated to you (since it is pass through) even if you don't take a distribution or salary.
thank you so much for sharing. I just confuse with the California Franchise tax for LLC taxed as S-corp (IRS form 2553). CA will treat my LLC as S-corp or as LLC for this situation? $800 + LLC fees (depend on revenue) is it correct? or 1.5% income?
If you elected with the IRS to have your LLC be taxed as an S Corp, then yes California also recognizes it. It will be the $800 franchise fee (which is a minimum tax), unless you make a lot of income and then it is the % (which would be more)
Im just starting out with my hvac business and when I applied for my license I chose corporation. Now I don't know if I should of gone LLC or S corp. I was setup as C corp and I did have to pay that double tax and im a single owner lol. What advice can you give me, should I stay as a corporation? I do eventually want to grow my business to maybe mid size not too big. Thanks!
Hi appreciate your video! What would you recommend for someone who is buying his own tractor and own trailer reefer to move freight to run as a solo person business
You could do that, but make sure you have adequate insurance to cover the risks involved
Thanks for the video!
I have a plan to put cars on Turo for rent, but in order to get some decent capital I was hoping to get a seizable loan.
I realize that it's easier to get a loan with a business, so I'm not sure which entity would fit my situation best.
Do you have any recommendations?
Hm my guess is having a corporation, but I'd recommend talking to a business advisor with SCORE or SBDC
@@ElizabethPW I was leaning towards a corporation, thank you for your response
Thanks for your video!! Very helpful! When you pay yourself to file C-corp can you pay yourself as a 1099 contractor or does it have to be as an employee?
Hm in theory an owner could pay themselves as a contractor but it would need a lot of paper trail to show that it was a legitimate transaction and not set up to avoid taxes. As a C Corp you'd usually pay yourself as an employee and pay yourself dividends on the stock.
@@ElizabethPW sorry I meant for an S corp. thanks for replying!!
Ah well generally the IRS will require you pay yourself as an employee some reasonable salary because they want to see the taxes taken out -- it would be a red flag to not do that
Thank you for this informative video! Here's my question. I am a Licensed Educational Psychologist (LEP) licensed in California. After 11 years of working in the pubic schools, I want to go into private practice. Can I form an LLC? Our professional organization (California Association of School Psychologists-CASP) seems to recommend an S-Corp, but I know that therapists in California can't form LLCs, and have to form professional corporations. Do these same rules apply to LEPs? I am just so confused!
Yes since LEPs are licensed under the Business & Professions Code (section 4989.20) then the only options for a one-owner practice are sole proprietorship or professional corporation. Also, it can be a professional corporation that is taxed as an S Corp (the S Corp is the tax thing, not the legal thing).
Hey Elizabeth as a Real Estate Investor that's engaged in active strategies like flipping or wholesaling im learning that for active income strategies, C Corps are a better entity to choose especially when speaking of the business growth and planning side. Because C Corp files separate , Banks, lenders don't know you're in business for yourself and buy getting the money out of the C Corp as a W-2 Salary, essentially you make yourself appear as a regular W-2 employee since most time banks scrutinize small business owners and love w-2 employees. So essentially you can control the narrative that's perrcieved of you. Which in this case makes qualifying for loans much easier to take down more deals. So although I may take a tax hit upfront, taking into consideration what im trying to accomplish (qualifying for loans much easier) I can have access to bank money with cheaper rates. From a Strategic standpoint, What are your thoughts?
That sounds good in theory, but banks will still know the C Corp is a small business. I assume that in this theory the C Corp itself is applying for a loan -- then in due diligence, they will look at the information and books of the company and see it is closely held by only one or a few owners. It is good that it is the corporation can develop its own credit rating, so eventually it can qualify for loans, but that is unlikely to happen on day 1 when it is new.
Hey Chris, I am the similar situation as a wholesaler/flipper. I was considering an S-Corp, especially I am obtaining revenue from another stream of income as a contractor. I never heard of anyone in this business or flipping/wholesaling doing s C-Corp. I am under the impression you can do what you want as an S-Corp and avoid to be double taxed as a C-Corp would.
I’m starting my real estate investment business but I’m so unsure as of which type to select, LLC or S-Corp. How are you guys doing it and what have been your experience?
Hi Elizabeth ,
I’m starting a business in Oxnard, Ca.
I need help setting up the business. I would prefer to pay someone to guide me through it. Who would I go to?
1. I want it to be a LLC
2. Which mailing service can I use instead of my house address with the government
3. What and how to fill out forms
4. Which billing software is best
5. Which bank is best
6. Need to make a yearly service contract
7. What kind of legal service I should retain to help with business issues
8. What kinds of receipts to use
9. Which insurance company and type is best
10. I assume h&r block is the best for taxes
Hi - if you need this level of support, check out the Patreon membership www.patreon.com/elizabethpw . I also recorded some videos that include reviews of various service providers, and will be adding more: czcams.com/play/PLd0wcIHXfOTcqL6ltujdaMVrhn_IoNxdg.html
Thanks! Just to clarify S corps can be formed by non green card holders or citizens if the pass the Substantial Presence Test
Ah so the rule is that all owners need to be "individuals, certain trusts, and estates" who are not "non-resident alien" individuals. So my understanding is that if someone qualifies as a resident via SPT then that may work, but the problem is that they must keep being an SPT and that depends on behavior (someone could be SPT for only half of a year, for example, depending on what they are doing that year). I'm not an immigration attorney though, and they are the experts on that (or tax accountants perhaps.) I'd recommend speaking to your immigration attorney or tax accountant to make sure you can keep the right status for all the time the S Corp shares are owned.
Hi. Great video. I have a sole prop LLC at this point. I was in real estate for many years and have now moved into insurance. No more real estate. Can I or should I keep my LLC sole prop the same or are there any changes you would advise or hurdles I will encounter? I'm a 1099.
Insurance LLCs do have special rules www.insurance.ca.gov/0200-industry/0020-apply-license/0300-business-license/business-entity-limited-liability.cfm
If my LLC is taxed as an S corp will I still be required to pay the $800 tax fee yearly? Also, how can I find out if Body Sculpting can become S Corp? and thank you so very much for all your video and help... so appreciated.
Yes both LLCs and S Corps (and C Corps) in California have to pay the $800/year minimum franchise fee. Well except that right now, the first calendar year is $0 for both. Since you don't need a medical license for body sculpting, it can be an LLC.
How would you incorporate if the idea is for a social purpose to make a difference but don't want a Non profit because the business that will be run will make a profit but the money will be used to make a difference?
Many states have "social purpose" or "social benefit" corporations, where the purpose of the company isn't just profit, but also some social purpose. Here's an article about it: nonprofitlawblog.com/california-social-purpose-corporation-an-overview/
Hi Elizabeth what would you recommend for a new construction company ?
I'd recommend talking to an accountant to see if the tax status matters for your particular business. Usually an LLC taxed as an S Corp is the best fit but occasionally a business should be a C Corp, and sometimes people are better off with the LLC taxed a pass-through-sole prop.
I just recently form a LLC, and I am a 1099 independent contractor. My employer insist on paying me in my name and not into my LLC bank account because he hired me as a provider at his clinic and not my LLC. Would it be okay to deposit the paycheck in my name into my LLC? Thank you
Weird that the boss is doing that -- it is in their interest to pay an LLC - makes it more likely that you are a contractor. Anyway, I don't know if the bank will accept the deposit if it is made in your name and not the LLCs. Besides that, you may want to talk to a tax person because the main issue is you want to make sure that if your LLC or you were audited, this won't be rejected -- your boss will issue you a 1099 personally so the IRS will think you are personally going to pay the taxes on that check.
I have a question??
If I wanted to start my own boutique BUT I wanted to buy items offline and design/ bedazzled a item I got offline what would I need? A LLC , or S CORP or C CORP ??
Well generally either an LLC or Corporation would work fine. C Corp if you are going to pitch venture capital or other investors.
Hello! I am a hairdresser making about 100k a year of course with expenses.
I am transitioning to opening a Business under s corp and INC. Does that sound right if I’m the only owner and employee right now under my business? It’s what I got recommended by a cpa.
Not sure if LLC was best
Thank you!
It can be an LLC taxed as an S Corp, or a corporation taxed as an S Corp. Yep you'd want the CPA to let you know if it will save money on taxes, since they have your actual numbers
Hi Elizabeth, thank you very much for this video. As a non-US resident looking to form a legal entity with no partners that will work with Amazon, Walmart, eBay, …. Etc. and in the e-commerce business, in general. Need your advice with should I go with single-member LLC but all these platforms do not confess to this type of entity and you can't put the name of the LLC on the storefront you only put the owner's name which is not professional at all also put in consideration the taxation OR can I go with the LLC and be elected as S-corp (I hope as non-resident) or C-corp
Which is better considering:
1- Easy to manage
2- Protection
3- Not expensive to maintain
4- Best Taxation
5- Is there anything else I should consider?
Thank you again
@Vanessa Campbell (Experian Consultant) Hello Vanessa, who's Paul, is he working with Elizabeth ?!
The Vanessa person who is replying to this message is posting spam - they have no affiliation with me. Spam comments/replies get deleted, to the extent they are found.
One aspect to know is that an S-Corporation can only be owned by someone who is a US citizen or legal resident. So if you are not, then you are picking between an LLC taxed as a sole proprietorship, an LLC taxed as a C Corp, or a corporation taxed as a C Corp. I recommend you speak with a tax person or an accountant about which tax status is best for you. Many of my foreign clients use a corporation taxed as a C Corp because that is more common in their own country, and easier to explain.
@@ElizabethPW Thank you very much for your answer, do you have any recommendations for the tax person or an accountant
you might try this company freedomtaxaccounting.com/services/international-tax-services/ - they work with international clients and can also help with getting the EIN and ITIN when you're outside the USA
Hi! I want to start a small business selling candles. I would be the owner and only worker until my daughter is older. I want to leave it for my daughter when I’m no longer here. I’m still a little confused. What would you recommend?
Hi - if you want the business to exist after you are gone, then you'd want to create either an LLC or corporation. All things being equal, I'd recommend an LLC specifically, because the logistics are a bit easier.
I have a C corp, I am an electrician, not making much, and paying taxes. What would you recommend?
It really depends on the exact numbers -- best to have a tax person / accoutant run the numbers both ways to see what makes sense
Hello, I’m in NY and I just opened up a LLC for my husband and I to provide transportation services. How can we pay him a salary and how can we lower the amt of taxes we’re paying? He started working under his friend’s LLC co in March 2022 and didn’t put aside taxes, now he owes over 10,000
To be able to do more tax planning, you would elect for the LLC to be taxed as an S Corp www.irs.gov/forms-pubs/about-form-2553 and then you can run payroll for him - you may also want to talk to an accountant or tax person who can negotiate with the IRS for you to set up payments
I have an LLC and I got approved after i filed 2553 to be an S corp ... should I change my State OF California LLC to s corp on state secretary page. if so which form. the forms on your videos show more options under Forms. also on form its conversion entity is changing state .? please help thanks
LLC is the legal entity and S Corp is the tax status. So you can just keep you LLC and have it taxed as an S Corp.
Shalom, Elizabeth. I'd like to have my business as S.P. Is it possible to also have it as an S-Corp? Should I obtain other employment, am I permitted to utilize my company's credentials, as entity, for taxes or payments/ checks? Thanks in advance 😊.
If you have your business as a sole proprietorship, then it is an SP for both legal and tax purposes. To have a business be taxed as an S Corp, you'd need a corporation, LLC, or partnership. But you can use your SP business to run payroll, pay expenses, or write checks -- you'd just want to get a business checking account.
Hello quick question how do Inapply for a SEIN I DID OBTAIN THE EIN # BUT ITS ASKJNG ME FOR SEIN I JJST DID A S CORPORATION
Some states don't have an EIN for every business, but some do. Go to the state's corporate website, employer website, and/or their tax revenue website and look for info on a state tax ID
How could you be contacted, in case of a consulting service for creating a corporation structure?
I'm not taking new clients right now. Best of luck with your search!
Hello I am a licensed esthetician wanting to start my own business and I’m still unsure if I fall under the “professional” category that disqualifies me from an LLC. Also don’t know if a C corp or S corp is better for me.
So it does depend on your state -- in some places an esthetician would be part of the "licensed" professionals who are required to get a professional corporation (or in some states, a professional LLC). Most likely your licensing board would tell you. Generally you'd want an S Corp unless there is a special reason you want a C Corp (you'd probably know if you had a special reason).
I am setting up an S Corp and I believe it will be taxed as an LLC...Can I do that? I am going to the Northwest services website. I am not sure if my company name on their website should be , Inc or , LLC. Can you advise? Great videos!
I guess I should add it is a financial planning business and 1099s are received in our personal name, not in the name of the business. After looking through comments, that might be an issue.
So LLC isn't a tax status. You can have an LLC taxed as a sole prop, or an LLC taxed as an S Corp or C Corp. You can have a Corp taxed as an S Corp or a C Corp. If you form an S Corp, then you'd update your W-9 with whoever gives you the 1099s with the corporate info.
Hey Elizabeth, I’m just starting up my content creation business via gaming mostly on twitch and CZcams as well as ebook publishing. I’m in the process of submitting my form 8832 and im so torn and a bit stressed as to what to get taxed as, I was honestly wondering what you’d suggestion for someone whose a single owner but also someone who wants to take advantage of tax writes off on things to start up my business such as editing software and equipment as well as potential travel write offs for traveling for collaborations. I plan on being a one man band until I can find serious business partners in the future. Thank you
I assume you have created an LLC and are thinking of submitting a form 8832 to have it taxed as a corporation. Many items like travel, start up expenses, ordinary expenses -- they are deductible against income if your LLC is taxed as a sole prop or as a corporation. There are tax savings for corporations but they tend to not kick in until the business is making more revenue and profit. Now there are unique situations where a corporation tax status makes sense from the beginning, but you'd want to chat with a tax person to see if those apply to you. (Will be hard to get a tax person appointment right now in late March / early April, though.)
@@ElizabethPW Thanks for thé response and can I always change from sole proprietor to an S Corp ? I’m just starting out so I don’t think the S Corp is the right move at this very moment, however I will book with you when you get some free time.
Right you can change in a future year
Hi great vid i am a real estate investor and buying properties and renting them out. I am currently registered as an LLC. Is an s or c corp a better option?
You'd need a tax person to crunch the numbers for your particular situation, because you only want to change to an S Corp or C Corp status if it saves taxes (and it might not). Much of the time, an LLC that holds real estate is better to be taxed as a partnership (or sole prop, if one person).
@kings104 mind being my mentor?
So for Notary Public what route would be best?
I usually recommend LLC and you can switch to "LLC taxed as an S Corp" later, for tax savings
Hi Elizabeth, I am starting my company selling cosmetics on my website and then eventually cosmetics and clothing but not sure if i should start as an LLC or C- Corp please help
I'd only file a C Corp if you plan to pitch venture capital or angel funding. If you are self-funding, I'd go with an LLC
@@ElizabethPW thank you wait is Angel funding like grants I don’t have to pay back? Because I am planning on applying for grants to get by business of the ground to buy the cosmetics I will sell online…
I’ve been trying to learn this stuff for ages but it still never makes any sense to me.. so you register as an LLC and then chose an option on how to be taxed?
Yes you form the LLC and then you decide how you want to be taxed (if you don't decide, then you get the default rule)
I live in maryland. Can I file for a llc now then decide later if I should switch the a s crop or c crop?
By the way thank you for the info and all the help
You're welcome! Yes you can change the tax status at a later time to an S Corp or C Corp.
I have a private security company currently a sole prop. Would a C-Corp be best? I'm unsure on which way to go about it.
Hm you may want to speak with your tax person to see what form will be the best way for you to save on taxes.
@@ElizabethPW thank you will do your video was very informative. I appreciate the information.
what would you recommend for a smoke shop
It really depends on the owners and the financial/tax setup. My general recommendation is an LLC taxed as an S Corp, but it does depend on who the owners are and the revenue.
Does an S-corp owner pay taxes on the distributions and if so how much?
Yes. For an S Corp, the owner may pay themselves two ways -- via payroll for the work they do as owner-employee, and via distributions as an owner. For payroll, normal taxes are taken out. For distributions, the owner gets a K-1 at the end of the year and must state that income and pay taxes on their personal tax return.
Do you offer a consultations to find out which entity is best for a business?
If so how much you charge ?
Yep! I do Quick Calls (15 min for $100), which are great for figuring out what entity is best. You can find out more info here: www.elizabethpottsweinstein.com/15-min-quick-call/
@@ElizabethPW hey there. clicked on the link and it doesn't work? you got an email?
Hey Elizabeth- if I'm starting a new company. I'm based in California and my partner is based in London- is an LLC the best route? The Company will be run in Los Angeles.
It likely would be best to have an LLC or Corp when the owners are in two different countries -- otherwise you'd have a general partnership that's located in both the UK and CA (which would get complicated fast). Sometimes my non-US clients like corporations instead of LLCs because LLCs are unknown outside of the US.
@@ElizabethPW I’m so confused! We own corporations in Canada and are from Canada. C- Corp seems like the only option since we are nonresident aliens so we can’t elect to be S-Corp.
We want to buy rental properties- but it seems we need to create c-Corp- and then LLC in Ohio. We want very very low personal liability.
3 Long question. Sorry.
U mentioned c corporations can hold money in there after salary and all other corporate expenses paid to employees. C corp will pay tax on corporate earnings. 21%.earned that tax year. Money left in c corp name in the ank earned 5% and earned during that period. So corp will pay tax when filling next year? C Corp funds still not used for investment because waiting for right opportunity to invest. How long money not used for investment can be left in corp after employees paid. And any IRS publications that gives clear guidance and all rules to hold and distribute money to employees to minimize corporate and employee taxes?
Here's a good article about retained earnings www.upcounsel.com/tax-on-retained-earnings-c-corp
Thank you. Do you provide legal services in texas?
Only for trademark filings
Ok thank you.
So we can open an llc that behaves like an s corp from tax point of view but do banks see it that way?
Hm well a bank would consider it an LLC. If you want a bank to consider it to be a corporation, then you'd need to create that from the beginning
So if my company is LLC taxed as a C corporation, and I wanted to go public with my company would I have to convert my LLC into a C corporation?
Typically if you want to pitch VC or go public yes you'd convert to a C Corp
About to get an LLC for my wife’s Lash business. She’s the only 1 in the business. Does she get her LLC as a sole proprietor?
We just want to make sure it’s done right and we don’t miss anything. Once we get the LLC we will obtain an EIN and open a bank account with that EIN. We will run all the money through that bank including paying herself from that account. Am I missing something?
Yes if she is the only one, the default tax status is an LLC taxed as a sole prop. Yep you get the LLC, then the EIN, then a bank account, and run the $ through that. You may also need other business setup (business license, etc.) depending on where you are located
Hello I was hoping to get a consultation with you is that a possibility? Thank you so much
Hi, thanks for asking! The best way to consult with me is via a Patreon membership -- www.patreon.com/elizabethpw
Hi Elizabeth! Great video! So I’m opening a mobile therapy business. One therapist recommends that I open the entity as an LLC and whereas another therapist suggested an S Corp. What would be your recommendation? I’m so confused.
You can be an LLC that is taxed as an S Corp. That way you get the more simple paperwork of an LLC with the tax benefits of an S Corp.
@@ElizabethPW thanks so much! I’ll look into this process ASAP!
10:00 • VERY interesting...! Assuming S corps don't have access to this same benefit, why aren't S corps able to access similar or identical non-taxation benefits when such a business reinvests its profits without leftovers at the end of the fiscal year?
Well the S Corp owners will be taxed on the profits at the end of the year, even if they are reinvested (that's how the s corp pass-through taxation works). But the company doesn't have to distribute those profits -- the owners could pay the taxes out of their own pockets (or do a small distribution just to pay taxes) and then reinvest the profits into the biz.
@@ElizabethPW I appreciate you taking time to elaborate and explain; thanks so much! I understand now 🎆
at 3:43 when you are talking about the formalities (minutes for example) I am assuming you are talking about a Corporation, not an LLC that is taxed as a C-Corp or S-Corp or are you referring to those too? this should have like 100K views by the way
Minutes are a formality for corporations, but LLCs will have a bit of formalities too. Like if you want to do something (such as take out an SBA business loan), an LLC should have written documentation of that decision, usually in the form of "declarations" (but could be minutes of a meeting too) -- even if you are the only owner. Also "formalities" refers to having a separate bank account etc.
I am a small Realtor wanting to build business credit and grow my business. Should I do a
S corp. Or LLC?
Well if you are picking between LLC and S Corp, likely the best option is to be an LLC that is taxed as an S Corp -- you get the benefits of both
If I start a business and everything’s an out of pocket expense, with no investors atm, should I go with the LLC or SCorp?
Usually it is best to have an LLC because the most simple, when there's no income
@@ElizabethPW thanks for the info
Nurse practitioner in california. Should u go S cor or P.C? I do not know if we can do LLC?
Right you cannot do an LLC, so you can set up a professional corporation (and elect for it to be taxed as an S Corp)
Thank you & Good morning .
I was advice as NP IN CA by bizfileonlone CA of State to file that the Entity form should be General Stock of Corporation instead of P.C? Is this true or there missing something? I will still be supervise by MD but not working directly with them
Hello, if your revenue is 40 million or more is it wise to only have a LLC entity
It really depends more upon profit amount, assets/liabilities, and benefits. There are companies making millions who are still LLCs or S Corps and there are smaller companies who are C Corps -- because it makes more sense due to their tax bill, deductions, etc.
For an S Corp- when applying for an EIN do you need to fill out paperwork as a small business?
I'm not quite sure what you mean, but you'd create the corporation with the state, then get the EIN for the corporation, then file the paperwork to elect it to be treated as an S Corp
@@ElizabethPW how do I elect to be an s Corp?
So we are a one owner LLC but have 3 independent contractors that work for us. Are we still able to tax as an S Corp?
The independent contractor's don't have an effect on whether your biz can be taxed as an S Corp
@@ElizabethPW thanks so much. For 2021 taxes, we filed as a C corp so had to submit a late form 8832 but can we fill out the S Corp form to file that way for the year or should be just continue as C corp for this year and try to change over for next year?
I’m opening a vegan convenience store should I go S Corp or LLC? It’s just me no other owners or investors and no employees.
Thanks in advance
LLC is a bit easier on the paperwork, and you can still be taxed as an S Corp. For most one-owner situations that works well.
Thank you that’s the direction I was heading
Hello Elizabeth, can you help me to set up the right business entity?
or even to figure out which one would be right for me?
Hi - I'm not taking new clients right now, but I will have a livestream Q/A on October 25th and also I will be opening up my Patreon soon (which will include discord DM, Q/As, and even calls at the higher level) - so check that out if you'd like to get questions answered there
Im gonna start an etsy shop selling digital products as a start. I was told to purchase an llc, im the only gonna be main business owner.
Would an S corp be ideal for me?
I should add I'm new to entrepreneurship
Typically an S Corp only makes sense if your business is making a lot of profit (like high five figures) or you need it for some particular other reason. You can start with an LLC and then change it to be taxed as an S Corp later (but it is still legally an LLC) -- LLCs are very flexible that way
@@ElizabethPW gotcha. I'm a new business owner. I'm not sure how much I'll make as I haven't sold anything yet. Oh I didn't know you can change from llc to S Corp later on. Ty
Can someone with a valid SS number but without a green card yet can be a shareholder/owner of a corporation?
Anyone can be the owner of a C Corp ... for an S Corp it is about being a legal resident (which could be a green card but there are other legal resident status)
Hello Elizabeth, Is it possible to change from LLC to a Corporation.
Yep that is called a "conversion"
@@ElizabethPW Thank you for your help.