Good afternoon....I would suggest you either form an S Corporation or a Limited Liability Company. Both are flow through entities so there is no risk of taxation at both levels and both protect your personal assets from exposure to entity liabilities.
To form the S Corporation...you will need to file Articles of Incorporation with the Secretary of State. You will then need Corporate Bylaws and an Organizational Consent document. You will need to file an S Election form with the IRS and obtain a Taxpayer ID from the IRS.
To form an LLC....you need to file a Certificate of Formation with the Secretary of State. You then need to prepare an Operating Agreement setting forth the rules and agreement of the LLC. You will need to obtain a Taxpayer ID from the IRS.
Both entities are pretty inexpensive to form and operate.
I hope this has given you the guidance you were seeking. I wish you the best of luck!
The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.
This is pretty much the answer I was looking for however I would like a little more clarification to determine if I will go with an 'S Corporation' or 'LLC'. Apart from the mechanics of setting either up, which you described well, are there any advantages/disadvantages to either of them down the road? - i.e. after one has already been set up. In other words, for my situation as I described it, if I had the option of choosing between having an already-setup S Corp. or LLC, which would you recommend for a single-person entity, most of whose expenses will be travel and PC equipment? Thanks.
I would do the LLC....One...it has no restrictions as to who can be shareholders should you have any additional owners down the road. Two...as a single member LLC, you need not file a tax return for the LLC. Three...The structure of the LLC with an Operating Agreement makes it much easier if down the road you need additional capital and you bring in new owners and need to provide for preferences of the return of capital.
Thanks, XXXXX XXXXX going to accept this answer. However if you could please enlighten me on one of the terms - "Flow-through entity". ??
My pleasure...It means that the entity itself does not pay taxes...rather all the taxable items of the entity "flow through" do the tax returns of the owners by way of a K-1 which is attached to the tax return of the entity. In the case of a single member LLC, the LLC doesn't even have to do the return...rather you just report everything on Schedule C of your 1040.
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).