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Sole Proprietorship or S corp? which is the best? why?
- Thread starter psrgc
- Start date
gcwaiting007
Registered Users (C)
485incsc...
I guess you are doing some research about starting your own company/corp and want some leads on how to go about it or where to start.
Well, like JoeF mentioned, there are pros and cons to each type of business. While sole proprietorship is good in a way that you have full control over evrything you do, it has also the problem of full liability. So, if you provide some consultancy and the client is not happy with it and decides to sue you then not just the company's assets, but even all of your personal belongings can be at stake.
While Corps don't have that problem, they have other problems like, you have to be meticulous in mainitaining lots of paperwork, informing the state about when and where you will be conducting your meetings, what are decisions/minutes of the meetings, who are your officers and shareholders, etc. etc. all those headaches which any corp faces. Also, if you make profit and give yourself and your shareholders dividend from those profits, then that will be taxed at both the corporate level as well as individual level.
Then there are enitities that are a mixture of these above two like LLCs, S-Corp(a corp with a special status). Each one has its own merits and demerits from your stand-point.
So basically, you have to decide for yourself what is best suited for you. Surf the net for more info on Tax laws, Operating by laws, general opinions of people. Talk to other people in your profession who have gone that path before. Compile and tabulate information for quick references and discusss with your 'pingboards' (I mean your spouse/close confidantes) and then decide.
Hiring people, placing people in different places in US, etc. these are totally separate issues from forming a company, and need to be explored separately.
Hope this helps
I guess you are doing some research about starting your own company/corp and want some leads on how to go about it or where to start.
Well, like JoeF mentioned, there are pros and cons to each type of business. While sole proprietorship is good in a way that you have full control over evrything you do, it has also the problem of full liability. So, if you provide some consultancy and the client is not happy with it and decides to sue you then not just the company's assets, but even all of your personal belongings can be at stake.
While Corps don't have that problem, they have other problems like, you have to be meticulous in mainitaining lots of paperwork, informing the state about when and where you will be conducting your meetings, what are decisions/minutes of the meetings, who are your officers and shareholders, etc. etc. all those headaches which any corp faces. Also, if you make profit and give yourself and your shareholders dividend from those profits, then that will be taxed at both the corporate level as well as individual level.
Then there are enitities that are a mixture of these above two like LLCs, S-Corp(a corp with a special status). Each one has its own merits and demerits from your stand-point.
So basically, you have to decide for yourself what is best suited for you. Surf the net for more info on Tax laws, Operating by laws, general opinions of people. Talk to other people in your profession who have gone that path before. Compile and tabulate information for quick references and discusss with your 'pingboards' (I mean your spouse/close confidantes) and then decide.
Hiring people, placing people in different places in US, etc. these are totally separate issues from forming a company, and need to be explored separately.
Hope this helps