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An LLC gives you a liability sheild similar to an S corp but, a single-member LLC is easier to set-up (in many states it can literally be set-up with simple form and a small registration fee). Both entities give you the benefits of pass-through taxation (business is taxed at personal level not business level -- ie no double tax).
Keep in mind that just because you have and S Corp or an LLC, while the liabability shield can be helpful in many circumstances, it won't shield you from liability if you, say, drop a light on a model's head...... She/he will sue the LLC AND YOU personnally. Now, if an employee of yours drops a light on a model's head, the S/LLC structure will help protect your personal assets.
You should consult an attorney (tax and business) for any fine differences with S vs LLC
Finally a topic that I can speak intelligently on...
Dave is correct. From what you have said, an LLC offers you all of the meaningful benefits of an S Corp. without the expense of the S Corp. Also, depending upon how your company grows in time, by maintaining your LLC status you grant yourself greater flexibilitiy in the future. While I am not a small business attorney recognized by the State Bar Association of Texas, the LLC designation and a good personal liability insurance policy ($1-2 Million) should provide ample coverage at very modest cost.
A good small business attorney and accountant will be your best friends. I always worry far more about payroll and tax filing than I do the liability, as they haven't created a business structure or insurance policy that gets your butt out of hock with the IRS.
Thats a CPA question who's familiar with your states taxing laws. My CPA advised me to a SubS...and I have 3 now...he explained all of the ins and outs and its...half a dozen one way...and 6 the other...Point is, they both offer the pass through of taxable income...
I purchased an umbrella policy from my insurance carrier...$5 million and is VERY inexpensive...you should speak to an insurance agent about one that may be right for you..it offers some strong safety nets in many areas
When I had my Farrier business going, I went the S Corporation route. But, in saying that, here in Tx. it would be best not only talking to a CPA, but also a lawyer as many of the laws have changed here. All thanks to George W., including some of the insurance issues from what I hear.
I know it's an Apple and Oranges comparison but it's best to check with those that really know the in's and out's on this.
While an LLC is much simpler, depending on your business growth, an S Corp will allow contributions to be made to a Keogh plan, where an LLC may only allow IRA type contributions. This only becomes a concern if you have enough income to actually "defer" some of it.
A tax professional can advise you as to the options, but in most regards, an LLC provides the same benefits as an S Corp, without the additional busy work.
I dont know about other states, but here in Michigan when I set up an LLC a year ago, we also designated it an S Corp. I dont really recall why other then that is what the attorney and CPA involved in the deal reccomended. I do recall having to fill out the forms for both though. I have also set up corporations that were also S corps and the big benefit of the LLC was less anual paperwork. With a Corp you have to do annual reports and minutes and file them with the state even when it is designated an S corp.
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