Online Incorporation MaxBlog

Determining the best corporate status for your business has many considerations. When thinking about self-employment taxes however, forming an S corporation offers a clear-cut benefit over forming an LLC. This tax applies for such things as Social Security and Medicare, much like the payroll tax deducted from ones paycheck.

In an S Corporation, an individual shareholder only pays tax on salaries and bonuses they receive from the company. On the other hand, a shareholder in an LLC pays on both salaries/bonuses and their share of profit in the company, which can amount to more than 15% of taxable income.

“Can S Corporation Status Reduce Self-Employment Taxes?” in MaxFilings’ Knowledge Center addresses this issue and raises other important considerations you must be aware of.

Even though an operating agreement is not required for an LLC in all states, you might consider it necessary. Even for a solely owned LLC, the operating agreement helps solidify your limited liability status. For LLCs with multiple members, an operating agreement pre-addresses many issues that could arise, from management to money issues.

If you do not have an operating agreement and a dispute arises between two members of the company, default rules apply which are established by the state. And which do you think is better, operating under the rules you wrote – or those of the state? Any entrepreneur should read Is An Operating Agreement Necessary for an LLC? for a closer look at this important issue.

Starting a business is a huge undertaking. There’s the planning, the marketing, the financing and all the other things entrepreneurs must do to be successful. No wonder owning a business is often so overwhelming that the business doesn’t get off the ground.

Support is important for new business start-ups. SCORE is a non-profit organization developed to help new business owners get their businesses off and running. The organization offers valuable counseling and advice on finding funds, business planning and marketing. SCORE’s business counseling is available via email through the organizations website, www.score.org, or in the office.

Find a local SCORE office near you at score.org.
Need to research questions about incorporating or forming an LLC online? Visit the MaxFilings Knowledge Center.

Incorporating your business may offer benefits over a sole proprietorship or partnership structure, especially since establishing a corporation or limited liability company provides protection of the personal assets of officers, directors, and shareholders.

However, its important to understand that there are limitations to this protection. A few actions that are not subject to the limited liability of corporate or LLC status include but are not limited to:

• Personal guarantee of loans
• Tax evasion
• Criminal activity

To find out more, check out Exceptions to the Limited Liability Protection of a Corporation, which discusses several situations when your status as a corporation may not give you limited liability. And while youre there, take a look at the MaxFilings Knowledge Center to get more important questions answered.