LLC or S Corp: which structure should I choose for my business?
Hi,
I want to start an enterprise consisting of 3 businesses operating under it. The businesses won't be brick and mortar at the moment, but they will be:
1. A media company
2. A medical company
3. A 501c3 company
The medical company, although it will solely be mine, will be doing business with another business serving the medical field. I am looking for advice on the following:
-Should the overarching enterprise be structured as an S Corp or an LLC?
-Should the three businesses operating under the enterprise be structed as LLCs or S Corps?
Any other tips or information that could help my situation would be greatly appreciated.
Thanks in advance!
Expert Answers
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Nov 20, 2020
You will want an LLC for the first two companies and the 501c3 will be its own organization. "501c3" is the name for a type of non-profit, like an LLC is the name for a type of company or S Corp is the name for a type of company.
You are probably best off setting up 3 separate organizations with the media/medical both being under an LLC and the 501c3 being exactly that (a 501c3).
I'm not a lawyer but I've done a decent amount of research into this in the past, so take the advice with a grain of salt.
Nov 13, 2020
I went through this struggle a while back and it seemed like everyone had a different answer for me! After much research what I learned was:
+ S Corps CAN have tax advantages, but they don't seem to kick in until your business is making about $500K
+ S Corps are lot more work to maintain as you have to keep more specific records and include a payroll - even if it's just for yourself. Alternatively an LLC will allow you to take distributions, so for instance you can pay yourself if/when there's a profit, but you don't have to if cash is tight.
+ You can always upgrade from an LLC to an S Corp, but it's very hard to downgrade from an S Corp.
It sounds like you're just getting started, so I'd recommend going with an LLC for now.
Good luck!