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BCD · 10-22-2005, 11:48 AM

Here's the thing you're missing. A single-member LLC can elect to be taxed as either an S corp or a sole proprietorship. Under my proposal your LLC starts off as being taxed as a sole proprietorship and later elects to be taxed as an S corp. For all other purposes, the LLC remains the same LLC (i.e., Meier_Link, LLC will still be Meier_Link, LLC - not Meier_Link, Inc. - after the change in tax classification) so you don't need to go back to the Board of Realtors or Real Estate Commission. An LLC can also adopt assumed names, so you can use it for different business ventures.

The extra expense that you don't see is that when you organize a single-member LLC, all you do is file basic Articles of Organization with your Secretary of State, register with you state's Dept. of Revenue, and sign a canned Operating Agreement. If you are going to have an employees, you would also file to get a tax identification number with the IRS.

An S corp., on the other hand, requires you to file Articles of Incorporation, draft Bylaws or a Code of Regulations, prepare a stock certificate, have regular meeting minutes of your Board of Directors and Shareholders, file for a tax identification number with the IRS, make a timely S election, register with the state, prepare a separate tax return for the state and fed each year for the business, prepare a K-1 for use with your personal tax return, complete an additional schedule on your personal tax return, establish payroll / withholding accounts, and run payments to you through payroll / withholding. It is a complete pain in the butt for a small business. All told, you are looking at spending an extra $2,000 - $4,000 a year from an accounting / bookeeping point of view. Also, if you want the S corp setup properly, you need to hire an attorney. I only charge $350 - $500, including filing fees, for a single-member LLC. I charge $1,000 - $1,500, because of the extra work involved, for an S corp.

Also, based on my experience, you are asking for trouble if you don't engage a CPA from the outset. They can help setup all of your local, state and federal tax-related accounts, advise you re. your various obligations (e.g., quarterly installments of income tax), and help you put in place an internal accounting system so you keep good books. If you want to run a real business, you need to make this relatively small investment on the outset.

10-22-2005, 11:48 AM	#10 (permalink)
BCD Insane Location: Charlotte, NC	Here's the thing you're missing. A single-member LLC can elect to be taxed as either an S corp or a sole proprietorship. Under my proposal your LLC starts off as being taxed as a sole proprietorship and later elects to be taxed as an S corp. For all other purposes, the LLC remains the same LLC (i.e., Meier_Link, LLC will still be Meier_Link, LLC - not Meier_Link, Inc. - after the change in tax classification) so you don't need to go back to the Board of Realtors or Real Estate Commission. An LLC can also adopt assumed names, so you can use it for different business ventures. The extra expense that you don't see is that when you organize a single-member LLC, all you do is file basic Articles of Organization with your Secretary of State, register with you state's Dept. of Revenue, and sign a canned Operating Agreement. If you are going to have an employees, you would also file to get a tax identification number with the IRS. An S corp., on the other hand, requires you to file Articles of Incorporation, draft Bylaws or a Code of Regulations, prepare a stock certificate, have regular meeting minutes of your Board of Directors and Shareholders, file for a tax identification number with the IRS, make a timely S election, register with the state, prepare a separate tax return for the state and fed each year for the business, prepare a K-1 for use with your personal tax return, complete an additional schedule on your personal tax return, establish payroll / withholding accounts, and run payments to you through payroll / withholding. It is a complete pain in the butt for a small business. All told, you are looking at spending an extra $2,000 - $4,000 a year from an accounting / bookeeping point of view. Also, if you want the S corp setup properly, you need to hire an attorney. I only charge $350 - $500, including filing fees, for a single-member LLC. I charge $1,000 - $1,500, because of the extra work involved, for an S corp. Also, based on my experience, you are asking for trouble if you don't engage a CPA from the outset. They can help setup all of your local, state and federal tax-related accounts, advise you re. your various obligations (e.g., quarterly installments of income tax), and help you put in place an internal accounting system so you keep good books. If you want to run a real business, you need to make this relatively small investment on the outset.