LLCs Vs. S-Corps
[LLCs] offer no real tax advantage for most entrepreneurs, and since they tend to be more expensive, one might wonder why. But, key in on two words from the last two sentences, attorney and expensive, and you get a clue as to one possible reason. Lawyers make more money from pushing LLCs. There are cases where I recommend an LLC, but it tends to be fairly infrequent.Also, I often get the impression that being able to say “I started an LLC” is thought to be cool. I don’t know if it sounds more sophisticated or like they have done something more substantial, but I do get the impressions from many new entrepreneurs that starting an LLC is somehow more significant than starting a plain old corporation.
As always, I need to say at this point that I am not an attorney. You need to consult with one about matters such as this. But, if they recommend an LLC over an S-Corp for your new venture please make sure to ask them very specific questions about differences in costs (short-term and long-term) and also what specific advantages you would get by setting up an LLC.
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