Q&A: What business form is the best for us?
I have been operating as a sole proprietor, but am considering an LLC form for my business. What do others like? For my investment property, is there a better way than an LLC? Also, for my internet business or other business, I believe that an LLC is the best way to go. I don't want to spend the money to have a corporation. I want to keep things as simple as possible.An LLC is a type of business entity, generally regarded as the one that provides the most liability protection and is the most flexible. It is not a tax entity. There is no tax form for "LLC".
With an LLC, you must choose which tax form to use. The default is a company code, but you can also choose S Corp or C Corp. You can also choose to be a corporation or a partnership outside of an LLC. The corporation offers liability protection, the partnership does not (unless it is a partnership within an LLC).
With a corporation you will have to do payroll, because you will be employees of the corporation. With a partnership, partners will pay income taxes (both income tax and roughly social security tax), but they don't have to pay payroll. The legal fee to set up any of the above could be $ 500-1500. Also, keep in mind that two owners, even if they are best friends, can ruin a business or friendship. It is often better to own it yourself and hire the other person as an employee.