How do you properly categorize a company? (LLC, Corp, etc.)
I'm starting up a new venture with a partner. It's a consulting company, so it's all online - no brick and mortar. She's in one state and I'm in another. What's the best way to file this? Or perhaps, the easiest way?
Really comes down to you. A LLC offers many protection, but an S Corp offer a little more, but now you tax structure is now different.. A little time with a good financial planner face to face and not blogs talks will get you in the right direction.
LLC and see how you both go and what more can you bring in.
You need a business law attorney that is preferably in your state or at least in the state of your partner. Sounds like an LLC to me based on my experience where you can describe the partnership but limit your liability. But I'm not an attorney, I just play one on television (had to say that). They can ask you some key questions and it will be very evident based on your answers what structure you need.
One thing i can tell you is it's worth spending lots of time up front...the time up front will save you hundreds of hours and thousands of dollars down the road if something goes off course. No one ever believes it will...which is why we have so many attorneys in business today!!
Company Structures: Sole Proprietorship - the proprietor has total liability. Partnership - Each partner has total liability for the partnership debts and obligations. Corporation - Each stockholder's liability is limited to their ownership percentage. Limited Liability Company - The LLC has the advantage of the same flexibility relative to Income Taxes as a partnership as well as the limited liability of corporations. Your best bet is to discuss your options (as shown above) with your Attorney or Tax Accountant to avoid mistakes that would leave you wide open to liabilities.
RG Bud Phelps
Simple start with LLC I recommend, focus on marketing and sales and if you grow you can always change it if needed.....
Andrea: Are you going to be performing services in multiple states? Do you think you will generate more than $114K in gross revenue per year? Will you need more than 100 shareholders to fund invest in your business? The answers to these and other questions will help you decide on the entity type you need. You should seek the advice of either an attorney or CPA to make the entity determination. Making the wrong choice could cost you thousands.