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S-Corp or LLC? [60 Second Law Bite]

Hi everyone is attorney Brian Russ coming at you today with a topic of should I set up an LLC or an S-corp? I get that question a lot people say, Well, should I be an LLC? Or should I be an S-corp? But really that’s the wrong question. Because LLC is a corporate structure and S Corp is the tax election. These are two completely different things. The question really should be should be, should my LLC be an S-corp? Should I make an S-corp election for my LLC or stay at the default C-Corp level? Generally it ends up being a tax equation more than anything else, where you talk to a tax adviser and ask them you know, for as a tax scheme is an S-Corp appropriate? The S-corp allows all the profits of the business to be taxed at personal level rather than a corporate level and then taxed again at the personal level, so it avoids double taxation. Usually a single member LLC’s I see S-Corps all the time, especially if the single member LLC, the owner, is a US citizen. There are some limits on who can elect the S-corp status but generally, it’s not a question of LLC or S-Corp. It’s should my LLC be an S-corp and usually the answer I have seen a single member LLC is, yes. But again, talk to your tax advisor to get that specifically.

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