S-corp or LLC for new software business in the United States
Pertaining to a new mISV (software business), should I choose an S-Corp or an LLC. Which would you choose and why?
4 Answers
There isn't a definitive answer that's true for every mISV.
The best resource I've read to help you think through the options is LLC or Corporation? How to Choose the Right Form for Your Business from Nolo press. It's written by an attorney for small business owners. It contains a good overview of the issues and considerations.
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I second Keith's advice on that book. In fact, all of Nolo's books are excellent. I've been able to find most of the Nolo books at my local library. Some have been worth buying as references, others are one-time reads. This is probably one of those. – Zuly Gonzalez 14 years ago
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While really worthwhile I do agree it's probably one time read. It's funny that I use the library for travel and fiction and history reading but somehow never thought about looking there for work related books. Great advice on the library Zuly! – Keith De Long 14 years ago
This question comes up frequently.
You may find Should I form an LLC or a corporation?, and its related posts, helpful.
Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.
S-Corp is ideal for a company with fewer than 30 employees and a non complicated ownership/ profit sharing structure. A S-Corp avoids the double taxation associated with corporations by passing profits directly though to the owners at their percent ownership. They also provide legal benefits by sheltering the owner’s assets from litigation in some cases. An S-Corp cannot be formed with more than 30 employees.
Which jurisdiction(s) will you be operating in?
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New York, Connecticut and New Jersey for a start. – Phantom Typist 14 years ago
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Re: New York, LLCs are subject to an expensive publication requirement in the larger counties, while corps are not. See: http://tinyurl.com/yf3vlwx – Henry The Hengineer 14 years ago
