LLC, Corp, S-corp?

Discussion in 'Starting a Business' started by teratogen, May 16, 2012.

  1. teratogen

    teratogen
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    I run a electronic music blog and we are in the works of snagging some pretty big deals. A number of my partners mentioned forming an LLC. While our profit is low, we are potentially entering some big contracts in the future and need some credibility and protection. What is the most basic, simple form of corporation we can form?
     
  2. ArcSine

    ArcSine
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    In many cases the scales are tipped a bit in LLC's favor over the S Corporation, when it comes to simplicity. In a multi-partner situation the argument for an LLC can become even stronger.

    I'm a fan of S Corps in the proper setting, but you do have to be always on the alert to avoid any inadvertent mis-steps that might terminate the corporations "S" status for tax purposes. Not so with an LLC, as LLCs can generally do things which an S Corp is prohibited from doing.

    Go to the website of the Secretary of State for the state in which you'll form your entity, and you'll find helpful information on forming LLCs and corporations.

    You should give serious consideration to renting an accountant and/or attorney in the blueprint stages, for two important reasons...
    • Which vehicle is optimal--S Corp or LLC--is highly dependent on a number of case-specific factors. It's best to have the "S Corp or LLC" question answered by someone with expertise in this area, who has all the details of your situation on the table in front of him.
    • In a multi-partner business, the contractual agreement between the partners is both extremely important, and more complex than most entrepreneurs realize at the outset. There are a number of issues that should be incorporated into the agreement, but which most partners don't think about during the formation process. Those issues WILL come back to haunt you later, and they WILL be first-class headaches when they do. An attorney who's already drafted a boatload of partnership agreements knows the issues, and knows how to build 'em into the agreement properly.

    Best of success with the venture!
     

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