Limited Liability Companies (LLC)

In general, consider the following guidelines: If you are the only owner, strongly consider a single member LLC because the entity can be formed by filing a one-page form, there are no corporate formalities and no corporate or partnership tax return is necessary.

A subchapter S election with the IRS turns a qualifying corporation (subchapter C Corporation) into a pass-through entity, which means that the corporation pays no federal corporate income tax. Instead, each year, shareholders pay tax on the corporation’s profit.

The main reason for setting up a corporation, S Corporation or limited liability company (LLC) is to protect investors from the company’s liabilities.