LLC or S Corp: which structure should I choose for my business?
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!
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.
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.