The LLC is usually a better choice. Here’s why.

• Limited Liability Companies (‘LLCs’) do not burden you with the same formalities required of corporations under state law in most case. Failure of corporations to observe specific formalities can easily result in ‘piercing the corporate veil’, making the owners personally liable;
• LLCs do not have the severe Ownership Restrictions that ‘S’ Corporations do. This allows LLCs much better flexibility in planning for Asset Protection. Thus unlike ‘S’ corporations, LLCs can be owned by Limited Partnerships and trusts that are not likely to be pierced in a lawsuit;
• Tax court cases in the 21st Century have undermined the old argument that anything paid in excess of salary or bonus is a ‘dividend’ not subject to self-employment social security or Medicare taxes. In 2001 the court ruled all payments made to a sole officer were fully subject to self-employment taxes since it held that the payments were wages and not distributions of net income. In 2002 the same conclusion was reached when a professional accounting corporation was before the Tax Court.
• ‘S’ corporations must allocate ordinary income and losses as well as capital gains the sam
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  inuing education. As a practical matter, the ‘S’ corporation’s utility is severely limited, primarily because it restricts flexibility, ownership choices, tax savings and liability protection.

  The LLC is usually a better choice. Here’s why.

  • Limited Liability Companies (‘LLCs’) do not burden you with the same formalities required of corporations under state law in most case. Failure of corporations to observe specific formalities can easily result in ‘piercing the corporate veil’, making the owners personally liable;
  • LLCs do not have the severe Ownership Restrictions that ‘S’ Corporations do. This allows LLCs much better flexibility in planning for Asset Protection. Thus unlike ‘S’ corporations, LLCs can be owned by Limited Partnerships and trusts that are not likely to be pierced in a lawsuit;
  • Tax court cases in the 21st Century have undermined the old argument that anything paid in excess of salary or bonus is a ‘dividend’ not subject to self-employment social security or Medicare taxes. In 2001 the court ruled all payments made to a sole officer were fully subject to self-employment taxes since it held that the payments were wages and not distributions of net income. In 2002 the same conclusion was reached when a professional accounting corporation was before the Tax Court.
  • ‘S’ corporations must allocate ordinary income and losses as well as capital gains the sa
    Is A High Security Paper Shredder Right For Your Business?
    Thanks to the "Fair And Accurate Credit Transactions Act" that went into effect in June of 2005, law now mandates that any business with one or more employees must have document disposal equipment. This is to ensure that all business and personal documents that need to be discarded are handled in a way that reduces and hopefully eliminates the threat of identity theft.To comply with this law, most businesses will choose to purchase a paper shredder and put it into use, as it is one of the most effective means of destroying documents containing pers
    quired of corporations under state law in most case. Failure of corporations to observe specific formalities can easily result in ‘piercing the corporate veil’, making the owners personally liable;
  • LLCs do not have the severe Ownership Restrictions that ‘S’ Corporations do. This allows LLCs much better flexibility in planning for Asset Protection. Thus unlike ‘S’ corporations, LLCs can be owned by Limited Partnerships and trusts that are not likely to be pierced in a lawsuit;
  • Tax court cases in the 21st Century have undermined the old argument that anything paid in excess of salary or bonus is a ‘dividend’ not subject to self-employment social security or Medicare taxes. In 2001 the court ruled all payments made to a sole officer were fully subject to self-employment taxes since it held that the payments were wages and not distributions of net income. In 2002 the same conclusion was reached when a professional accounting corporation was before the Tax Court.
  • ‘S’ corporations must allocate ordinary income and losses as well as capital gains the sa
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    unlike ‘S’ corporations, LLCs can be owned by Limited Partnerships and trusts that are not likely to be pierced in a lawsuit;
  • Tax court cases in the 21st Century have undermined the old argument that anything paid in excess of salary or bonus is a ‘dividend’ not subject to self-employment social security or Medicare taxes. In 2001 the court ruled all payments made to a sole officer were fully subject to self-employment taxes since it held that the payments were wages and not distributions of net income. In 2002 the same conclusion was reached when a professional accounting corporation was before the Tax Court.
  • ‘S’ corporations must allocate ordinary income and losses as well as capital gains the sa
    Projects Cost More As Interest Rate Rises
    The last time Inflation was above 4% interest rates were 11%, Terry Waite had just been released and it was the 17th of November 1991. In business terms many lifetimes ago. Whether the Bank of England will raise interest rates to 11% to achieve Gordon Brown’s mandate I will leave to the Money markets to speculate. It is unlikely that interest rates and hence the cost of capital will return the “lowest rates in 30 years” within the next two years.Within the context of Business’ implementing projects how should they respond to the changing environmen
    payments made to a sole officer were fully subject to self-employment taxes since it held that the payments were wages and not distributions of net income. In 2002 the same conclusion was reached when a professional accounting corporation was before the Tax Court.
  • ‘S’ corporations must allocate ordinary income and losses as well as capital gains the same to all shareholders. By contrast, an LLC can allocated them to LLC members who can benefit from them, and this allocation is not required to be made to all.
  • ‘S’ corporations often have loans between the corporation and its shareholders. Under state law, the board of directors are typically required to pass written resolutions to approve the particulars of loans between the ‘S’ corporation and an ‘interested party’ in order to avoid both legal and tax complications. When auditing, the IRS always asks for the documentation, looking in the corporate record book for resolutions and minutes and for the required promissory note. If the documentation is insufficient, the IRS can deem loan repayments as ‘taxable distributions’. Then ‘S’ status may be revoked, causing large negative tax consequences for the shareholders going back to past tax years.
  • Limited Liability Companies do not have the same problem. LLCs members have flexibility in making capital contributions to the Company and thus they can avoid having to characterize the transfer as a ‘loan’ to the company.
  • LLCs have what are known as ‘capital accounts’. Each member has one. Unlike the old ‘S’ corporation, contributions of cash or distributions of case are typically not ‘taxable events’ if guidelines are followed. An LLC member’s capital account can be increased or reduced according to whether a transaction is a contribution to capital or a dis