LLC vs. S-Corp vs. C-Corp
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LLC vs. S-Corp vs. C-Corp
1–10 of 88 posts
Re: LLC vs. S-Corp vs. C-Corp
#2That's why a sole proprietorship is best
Re: LLC vs. S-Corp vs. C-Corp
#3Good overview showing what's really important.
Now it makes sense to my why big companies have all of these.
eg: amazon inc AND amazon llc.
Re: LLC vs. S-Corp vs. C-Corp
#4Being in a higher tax bracket doesn't lead you to pay more tax on your initial income, only a higher rate on money above a certain threshold. That said, the article is right in that an S-Corp or LLC sound right and are rarely a good idea because you sometimes lose out on certain tax deductions because your personal income is too high. Remember though, a tax bracket is a sliding scale... see the margin tax rates table at https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
Re: LLC vs. S-Corp vs. C-Corp
#5The article suggests, but doesn't explain why LLC / S-Corp is better if you are taking all the money out.
It feels to me that if you don't have to retain any money, then they both collapse to the same situation more or less. The only difference being C-Corp needing more expenses in accounting (and maybe legal) to just keep the books in order, but that is not a significant factor.
Re: LLC vs. S-Corp vs. C-Corp
#6It's a little more complicated than that:
> An LLC with either a single member or more than one member can elect to be classified as a corporation rather than be classified as a partnership or disregarded entity under the default rules discussed earlier. File Form 8832, Entity Classification Election, to elect classification as a C corporation. File Form 2553, Election by a Small Business Corporation, to elect classification as an S corporation.
Re: LLC vs. S-Corp vs. C-Corp
#7A Georgia LLC can choose to have some or all of its net income left in the company and taxed as C-Corp with the remainder distributed to shareholders as S-Corp. Its very flexible and there is no preset position. You look at your cash position come tax time and decide how best to deal with it.
Re: LLC vs. S-Corp vs. C-Corp
#8Being in a higher tax bracket doesn't lead you to pay more tax on your initial income, only a higher rate on money above a certain threshold. That said, the article is right in that an S-Corp or LLC sound right and are rarely a good idea because you sometimes lose out on certain tax deductions because your personal income is too high. Remember though, a tax bracket is a sliding scale... see the margin tax rates table…
This is correct, and worth pointing out, because the OP has this line:
>So now you owe an extra 10% on your $40K salary which is $4K. And you also owe 35% on that $50k which is around $18K.
Which is false. The extra 50k is taxed more than your first 40k. Your overall effective tax rate increases, but it's incremental. Your first 40k is taxed the same with or without the extra 50k, but the extra 50k is taxed at a higher rate because it's in a higher marginal rate.
Re: LLC vs. S-Corp vs. C-Corp
#9What isn't mentioned here is that an LLC is relatively straightforward to set up, an average Hacker News reader could set one up in their state with a few hundred dollars and no lawyer. S-Corps are more complicated (you will need a lawyer), and C-Corps are VERY complicated (you will want at least 2 lawyers). The amount of legal fees and time spent creating the different corporations varies immensely. It's not as simple a comparison as just "tax code". If you are not sure what kind of corporation you want to set up, I highly recommend you spend a few hundred dollars and consult a lawyer for advice. The internet is a terrible place for legal advice.
Source: I own an LLC, and consulted a lawyer about C-Corps and S-Corps.
Re: LLC vs. S-Corp vs. C-Corp
#10Firstly, I am skeptical that the author uses the word 'thru' so much.
Secondly, if I were to take all the money personally, and then say, buy something useful for myself that my business could really use too, instead of retaining money on paper, does that not work?