LLC or INC - whats better for an individual - Not a mestri shop

[Hitman]

Single ganiki C2C podaniki... LLC or S Inc which is better? spoke to CPA, he recommends S- Corp (Inc), Friend of Friend recommends LLC.. so confused.  

Any advice from DB experts? 

Thanks in advance. 

[jefferson1]

Idi gc unnavallaka?

[tennisluvr]

LLC best as the name itself says, Limited Liability Corporation. 

Don't go for INC

[Bitcoin_Baba3]

LLC

[Hitman]

19 minutes ago, tennisluvr said:

LLC best as the name itself says, Limited Liability Corporation. 

Don't go for INC

 

2 minutes ago, Bitcoin_Baba3 said:

LLC

main Pros and Cons.. ivvagalara?  just to help my research. Anyway i will do some reading this evening before come to a conclusion. 

Thanks

[Bitcoin_Baba3]

5 minutes ago, Hitman said:

 

main Pros and Cons.. ivvagalara?  just to help my research. Anyway i will do some reading this evening before come to a conclusion. 

Thanks

Which is Better LLC or INC: Everything You Need to Know

Which is better, an LLC or Inc?There are three types of U.S. business entities most startup owners will consider: LLC, C-corp, and S-corp. 3 min read

Which is better, an LLC or Inc?There are three types of U.S. business entities most startup owners will consider: LLC, C-corp, and S-corp. LLC stands for limited liability company, and the abbreviations “inc.” and “corp.” stand for a corporation.

When deciding between an LLC, C-corp, and an S-corp, consider whether you will be seeking outside investors and if the company will be generating a profit soon.

What Is Incorporation?

If you choose to incorporate a business, you move from a sole proprietorship or general partnership into a company that's recognized by a state of incorporation. This makes it a legal business entity that is separate from those who founded it.

This new structure falls into one of two categories: 

• A limited liability company (LLC) 
• A corporation (corp). 

The two types of corporations are an S corporation and a C corporation. There are many benefits to incorporation, such as being protected from personal liability and having credibility with your customers. There are also specific pros and cons to each incorporation type.

LLC, S-Corp, and C-Corp

An LLC is a simple way to start a business. There's less paperwork needed to form it, and it's a legitimate corporate entity. An LLC is official once the articles of organization are complete and any applicable notice requirement is met. 

Many LLCs use operating agreements to establish the role of its members. If there's no operating agreement, the LLC reverts to the default rules in the state statutes. While this is not necessary for it to be valid, it is a good practice that establishes the rights and responsibilities of the members. It defines the business relationship and deals with issues of:

• Structure
• The allocation of profits and losses
• Provisions for the death of a member
• Provisions for a buyout
• Other considerations.

A limited liability company has various benefits, including:

• Protecting business owners from being personally liable for the actions of the business.
• Protecting your personal assets if a lawsuit involving the business occurs.
• Flexibility in management, unlike the rigid structure of a corporation.
• Pass-through taxation, which means the income and loss pass through your personal tax return, as opposed to the business.

Differences Between an LLC and an Incorporation

Businesses tend to have abbreviations like LLC or Inc., but what do they mean? What are the differences between an LLC and an Inc.?

These letters may be confusing, but they simply stand for the different types of business entities. An LLC is a limited liability company, while Inc. and corp. are for corporations. 

Forming corporations and LLCs require paperwork with your state. They also protect their founders from liability related to business. They are managed, owned, and taxed differently, however, and have different reporting and recordkeeping obligations. 

Inc. Versus LLC: Liability Protection

With LLCs and corporations, the owners are shielded from being personally liable for business debt or legal issues. If the business is in collections from creditors or is being sued, your personal assets, such as your house or car, are protected. The only thing you could lose is your business investment.

So, which is right for you? As an owner, you have the same liability protection with either entity.

Corporation Versus LLC: Taxes

There are two ways corporations are taxed:

• A C corporation pays taxes on profits. Shareholders pay personal tax on the dividends they receive. This is a double taxation on dividends, which many find undesirable. 
• An S corporation doesn't pay corporate tax. They have a pass-through taxation setup. This means the profits move to the shareholders and to their personal income tax. Only certain corporations are eligible for S designation.

By comparison, LLCs don't have a specific tax classification. Single-member LLCs are taxed as sole proprietorships, while multimember LLCs are taxed as partnerships.

An LLC's tax information is recorded on the member's personal tax returns, and he or she pays taxes on his or her share of the profits. An LLC can elect C- or S-corporation taxation if they qualify.

Here are some things to keep in mind:

• Outside investors may prefer a C corporation.
• S corporations can help small businesses save on taxes. However, a C corporation is best if you plan to retain cash within the company, as opposed to distributing it to the owners.
• LLCs have pass-through taxation without ownership restrictions.

[tennisluvr]

6 minutes ago, Hitman said:

 

main Pros and Cons.. ivvagalara?  just to help my research. Anyway i will do some reading this evening before come to a conclusion. 

Thanks

S Corp. versus LLC

What is an LLC?

The exact LLC definition varies slightly from state to state but, basically, an LLC is a business entity that is legally separate from its owners, who are known as “members." An LLC can have one member or many members.

Small business owners often choose to form an LLC instead of a corporation because LLCs offer more flexibility in the way they are managed and usually have fewer recordkeeping and reporting obligations than corporations.

What is an S corporation?

Unlike an LLC or a C corporation, an S corporation is not a type of business entity. The S corp. designation refers to the way a business has chosen to be taxed under the Internal Revenue Code.

S Corp. vs. LLC: Tax Benefits

For tax purposes, the IRS classifies businesses as sole proprietorships, partnerships, C corporations, or S corporations. There is no "LLC" tax classification and, therefore, LLCs are taxed as though they are another type of business.

The IRS automatically taxes single-member LLCs as sole proprietorships and multi-member LLCs as partnerships. But an LLC can also choose to be taxed as a C corporation or as an S corporation.

What's the difference between sole proprietorship LLC taxes and LLC taxed as S corp. taxes? For many small businesses, the main difference is in the way business owners pay Medicare and Social Security taxes—also known as "self employment taxes." Some LLC owners can save money on these taxes by choosing S corp. taxation.

If a Single-Member LLC Is Taxed as a Sole Proprietorship

The LLC member reports business income and expenses on his or her personal income tax return and pays personal income tax on company profits. The member is considered self-employed and thus is responsible for paying Social Security and Medicare taxes on those profits.

(As of 2016, self-employed individuals pay a 12.4 percent Social Security tax on the first $118,500 of income, and a 2.9 percent Medicare tax on all income, with an additional 0.9 percent Medicare tax imposed on high earners. Employees are subject to these same taxes, but the employer pays half and the employee pays half.)

If a Single-Member LLC Is Taxed as an S Corporation

The member can be considered an employee of the business. An owner-employee must be paid a reasonable salary. The LLC will report the salary as a business expense, and the owner will report both the salary and any remaining business profit on his or her personal tax return.

However, unlike the sole proprietor LLC owner who must pay Medicare and Social Security taxes on all profits, the S corporation and its owner will only pay these taxes on the owner's salary. The remaining profits are not subject to these taxes.

Here's One Example

Suppose you are an LLC owner taxed as a sole proprietor and your business makes $100,00 profit. You will report $100,000 of income, and you will pay Social Security tax and Medicare tax on the entire $100,000.

Now suppose you have elected to be taxed as an S corp. and have determined that your reasonable salary is $50,000. Your salary is a business expense, so the business now has a $50,000 profit. You will still report $100,000 of income [$50,000 of salary plus $50,000 of profit], but you and your business will only pay Social Security and Medicare taxes on your $50,000 salary.

S Corp. or LLC—Which Is Right for You?

The IRS's S corporation definition makes it clear that not every business qualifies to be taxed as an S corp. Most single-member LLCs will qualify, but you can't choose S corp. taxes if any of these apply to your single-member LLC:

• It is a foreign LLC
• The owner is a nonresident alien
• It is structured so that the owner is actually a corporation or partnership

(Multi-member LLCs that have more than 100 members also cannot be taxed as S corporations.)

To evaluate the benefits of S corp. vs. LLC taxation, you must consider whether changing to S corp. tax status will save you money. Find out what a reasonable salary would be for a person who does what you do. The IRS scrutinizes owner-shareholder salaries, so it is important not to set an artificially low salary for yourself. Then ask, if you paid yourself that salary, would your business have any profit left over? If the answer is no, then S corp. taxation may not help you.

If your business profits are greater than your reasonable salary, S corp. taxation may save you money. Consider also that your tax return will be somewhat more complex and, if you don't have other employees, you will have to set up tax withholding. An accountant can advise you on other benefits and consequences of choosing LLC vs. S corp. taxation for your business.

So, LLC or S Corp?

If you've already formed your LLC but are unhappy with the tax consequences headed your way, you can change your tax status. In general, you can elect LLC S corp. status at any time during the tax year prior to the year you want the election to take effect, or during the first two and a half months of the current year. New businesses have approximately 75 days to elect a different tax status.

Before deciding on S corporation vs. LLC taxation, be sure you carefully evaluate the various pros and cons and seek advice from a business lawyer or accountant.

Legalzoom can help you start a business. Whether you decide to start an LLC or start an S corp, the process is simple and affordable. If you're not sure which business structure is right for you, our legal plan attorney can answer your questions about LLCs and S corps and help you decide

[NenuEvaru]

LLC

[tennisluvr]

6 minutes ago, Hitman said:

 

main Pros and Cons.. ivvagalara?  just to help my research. Anyway i will do some reading this evening before come to a conclusion. 

Thanks

Congrats on your mestri dhandha. @appireddy antha great person avvalani @Quickgun_murugan vuncle wishing you

[sboyr2r]

9 minutes ago, tennisluvr said:

Congrats on your mestri dhandha. @appireddy antha great person avvalani @Quickgun_murugan vuncle wishing you

Thanks bro recently opened mestri shop called tech stallions bless me gif esukoo 

[Hitman]

@tennisluvr Nuvvu pampina notes bagundi.. Thanks to @Bitcoin_Baba3 also. 

What i understood is - Reasonable salary kanna ekkuva money undi ante.. go with INC to save Tax$. maintain a reasonable salary, rest declare as company profits to avoid FICA taxes. This might be more paper work. Else if all the money goes as your salary go with LLC. less paper work with LLC.  Hope im right with paper work aspect also. 

I haven't understood - LLC protects owners from being sued..or what ever...Not exactly sure here, How and When. In line of this statement.. i heard from a friend, not all big corporations accepts going C2C with an LLC. this appears to be a Con being LLC. 

At this time i could go as LLC, (I wont have many $'s left after running my salary). But, next year i would be part of Prime vendor's list with my client. Im not sure whether they accept an LLC to be such. I see limitations to grow (As you guys are blessing)...

 

 

[Quickgun_murugan]

21 hours ago, tennisluvr said:

Congrats on your mestri dhandha. @appireddy antha great person avvalani @Quickgun_murugan vuncle wishing you

Nice

[Quickgun_murugan]

22 hours ago, Hitman said:

Single ganiki C2C podaniki... LLC or S Inc which is better? spoke to CPA, he recommends S- Corp (Inc), Friend of Friend recommends LLC.. so confused.  

Any advice from DB experts? 

Thanks in advance. 

LLC petkunna nen 

[tennisluvr]

46 minutes ago, Quickgun_murugan said:

LLC petkunna nen 

Weed exports ka, already akkada nee polallo kumbhalu kumbhalu ga gaddi pandistunnaru ani inpermasion ochindi

[Quickgun_murugan]

1 hour ago, tennisluvr said:

Weed exports ka, already akkada nee polallo kumbhalu kumbhalu ga gaddi pandistunnaru ani inpermasion ochindi

em gaddo emo... last year nundi taxes penchi 10garu eeda ...