[Twinge]

Has anyone come across any good articles comparing the benefits of sole-propietership (or partnership) versus LLC or Incorporating? I'm sure Google could point me at some as well, but if anyone already knows any good comparisons clearly giving the advantages/disadvantages of such that would be spiffy.

 

[Twinge]

really informative post guys thanks for the info, just one quick question, since i am going into business with my friend, no relation, can our companys bank account be joint or how does that work so both of us are allowed access into it? thanks

Just set up the business as a partnership (basically a sole-proprietership but with 2 people instead of 1). The bank shouldn't give you any troubles setting up a joint account even if you aren't related; if they do you could always use a different bank (or threaten to).

 

[Twinge]

Also another big consideration is taxation, I think which was also mentioned. There are two types of corporations S-Corps, and C-Corps. S-Corps are more or less passthroughs, which means all the income flows through to you, and C-corps function as their own entity which means that they are taxed, and then when profits are distributed to you, they are taxed again. The tax rules with this are probably beyond my ability to explain fully. But those are the two major issues with choosing to incorporate (along with the money and time spent with incorporation, the issues of course vary with each individual business).

Useful Info. What are some of the other differences betwen S and C corporations? (E.g., why would you want to go with a C instead of an S?)

 

[Twinge]

Hi Twinge,

I think all that would apply to your business is that a S-corp and C-corp have different ways of taxation. Other differences are not as applicable such as exclusion of foreign shareholders, the limits on shareholders, and things like that. You would want to go with a c instead of an S for those reasons, but i dont think you would have problems with the limit on number of shareholders which the last time i remember was 75, or the foreign shareholder problem.

There are also some tax differences (such as specific deductions), that I wouldnt be able to tell you, and would probably specific to your business. Your best bet would be to consult a CPA there, as there is a lot of research there for income tax minimization.

Sorry I couldnt be of more help

Plenty helpful =) Enough of an overview to give me an idea - and to satiate my curiosity for now . I'll research further on my own to figure out more specifics if and when I need to.

The expense of incorporating depends on your state.

Here in TN the actual filing fee is $100.

For an LLC in TN the MINIMUM filing fee is $600.

Of course there is a little more reporting, but it's not bad.

The overall tax implications may be more to incorporate over an LLC, but not the initial out of pocket.

Yeesh, that high for LLC??

In Colorado the fee for filing for either a Corporation OR an LLC (same for both) is $25 if done online ($125 if done offlline).

That's the stated fee anyway; dunno if there are more hidden charges for registering.