If you've started a business one of the questions you need to answer is should you incorporate and if you do is a corporation or a LLC the best way to go about it.
If the business you start has any exposure to liability or if it's going to be your full time job I believe it is best to incorporate. A separate entity helps to insulate you from liability and creates a division between your business and you.
Once you've made that decision I believe in most cases it is best to become a Limited Liability Company (LLC). While a LLC can sometimes cost more to setup they reap benefits in the long term. Namely:
- A LLC can make an election with the IRS regarding how they want to be taxed. You can keep it simple and be taxed directly on your 1040 or you could choose S-Corporation status. You can even choose to be taxed as a regular corporation if you want. If you choose to form a corporation you are limited to being taxed as a corporation or a S-Corporation.
- LLC's do not need to compile shareholder minutes and have a board of directors like a regular corporation has making it much easier to maintain. You can lose the limited liability aspects of a corporation if you fail to comply with the standards so picking a LLC makes it very easy to be in compliance.
In any event this is a question you do not need to answer alone. We can help you make your decision and many attorneys have a great deal of knowledge in this area.
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