In the state of Florida, is an LLC or S Corp best?
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In the state of Florida, is an LLC or S Corp best?
Hello I will be launching a business this year, SiteWell Solutions. It
is a corporate health, safety and wellness business. I am hoping for
advice for which structure will be best suited to the business. Please let
me know if any additional information would be beneficial. Thanks
Asked on March 22, 2019 under Business Law, Florida
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
Legally, there is almost nothing to choose between them: they offer the same liability protection. Tax-wise, there is also essentially nothing to choose between them: both of them are "disregarded" or "pass through" entities where there is no separate corporate (or "double") taxation where profits are taxed first at the business level then again as the owner's income when he/she takes a distribution; rather, for both, profits "pass through" the company and are taxed only as part of the owner's income (you do have to file an additional form, a schedule K1, but the K1 is for information, not for imposing taxes).
The LLC is generally superior to the S-corp in the following way, which is why it has become the more popular option: it involves less paperwork and less formalities, and offers additional flexibility, should you have or take in partners, to separate ownership power from proft participation (e.g. you could give someone a generous participation in the profits while retaining the decision-making power). Most businesses find this flexibility and reduction in paperwork worthwhile.
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