• July 2018
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When starting a firm that operates in many states, what considerations do you take into account when deciding how to incorporate (LLC vs. S-corp)?

The factors to consider are endless, but I’ll mention the big ones:

  • The goals of your business. The most important one. Trying to be the next Google? Start a c-corp. Trying to make a modest living with personal liability protection? An LLC would probably suit you well.
  • Taxes. Do you not want to file taxes on behalf of your entity? With an LLC and s-corp, taxes “pass-through” to the owner; on the other hand, c-corps are separate entities which leads to an owner being taxed twice.
  • If you’re going to be seeking funding or becoming an IPO. If so, a C-Corp is your best bet.
  • The size of your business. If on the smaller size, an LLC is an attractive option.
  • If you’re planning on issue stock option plans, convertible notes etc. If so, you should probably stay away from an LLC.
  • The number of corporate formalities you’re willing to deal with. Corporations require many more administrative tasks to be completed.
  • If you plan on having any foreign shareholders. If so, stay away from S-Corps.

Choosing the right business entity for your company is a crucial decision. It probably goes without saying, but your decision will be better made with the assistance of a startup attorney. LawTrades offers competitively priced incorporation packages that come with an initial attorney consultation. Check us out!

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