Forum topic

My understanding is that your business structure (sole proprietorship, corporation, etc) totally depends upon the tax advantages that structure offers you. So talk to your accountant. Lynn

I started out as an LLC and then went to an S Corp.  Both help protect personal assets, but I found the S Corp to have better tax advantages.  (I am in Colorado, so the laws may be a little different.)  First of all you can be an employee of your S Corp but not of your LLC, so with an LLC you will pay self-employment tax.  In an S Corp you can be an employee and divide your income between salary and distributions.  Your salary is subject to all taxes, but the distributions are not subject to FICA, and since you would have an employee, you would not pay self-employment taxes.  To keep it clean, I pay myself about 50% in each category.  You also have other benefit options with an S Corp.  Check with a couple of accountants though to get more than one opinion.  If you want to contact me, you can email me at [email protected] and I can give you my phone number.