I'm working with a friend of mine on setting up a business that runs fitness bootcamps. He's been running it for a couple of years as sole proprietorship, but now wants to incorporate. Can someone remind me again what the differences between LLC, S-Corp, and C-Corp are and make a suggestion as to which is better?
Business Structure: S Corp vs C Corp or LLC?
Answers
Bobby, the first tip is to not take any advice from someone who presumptively advocates one of those entity structures, without first hearing the details of your friend's situation. Any one of those structures might be the superior choice, but it's the case-specific details that make the call.
Fortunately, it's such a common question that there's no need to reinvent the research wheel, so to speak. The 'net is laden with discussions which analyze that question, and Googling "llc vs s corp" and "llc vs c corp" will yield a boatload of hits, such as
http://www.feinberghanson.com/LLCvsSCorp.html
Review a few discussions of that type, with your friend's context in mind, and you'll probably find yourself leaning in the direction of one of those structures.
Post back in here, of course, if there are certain details or specifics you'd like to kick around. Best of success with the new venture!
If you are planning to take on additional investors you need to seek the advice of an attorney who is expert in the area of private offerings. You will need to document a private offering whether you are an LLC or SCorp when you take investors that are not accredited (wealth of $1M or more).
An LLC will cause you no end to
I'm not going to bore you with all the costs of accounting,
The cost of a private offering is enormous on its own.
I can recommend someone to talk with who essentially only consults with tech minded startups. email me and I will provide you with a referral.
Let's take a step back. In a perfect world you can have meetings with Accountants, Lawyers and
-Liability (willing to accept personal or you desire entity protection);
-Capital needs (will you need investors or is your financing set);
-Continuity of life (do you care if the organization survives you);
-Transferability (ability to transfer shares to new investors or decendents);
-Taxation (do not forget this issue which will be very big in 2013);
-Management structure (board vs members).
Every structure has benefits and costs. By answering these questions, the right structure should fall out or at least some options will need to be excluded.
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