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Ellen, Attorney
Category: Business Law
Satisfied Customers: 36714
Experience:  25 years of experience helping people like you.
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I am starting a Waste Management Company in South Carolina.

Customer Question

I am starting a Waste Management Company in South Carolina. We are trying to figure out what's bst for us. LLC vs a corporation like S-Corp? It is a residentail waste management company that probably the first year will only employee 10 to 15 employees but could grow hopefully to 25 to 50.
Submitted: 8 years ago.
Category: Business Law
Expert:  Ellen replied 8 years ago.

An S corp or a LLC appear to both be good choices. Both can insulate you from personal liability. Additionally both allow for flow through of income and losses to avoid double taxation. This means that the income derived by both entities is passed through directly to the owners and reported on the owners' personal income tax returns.

An LLC is more flexible in how owners divide up profits. Owners of an LLC can distribute profits in any manner they see fit whereas in an S corporation profits must be paid according to shares owned.

S corporations may save on employment taxes. The entire net income of the LLC’s business is subject to self-employment tax whereas for S corporations, only the salary paid to the owner-employee is subject to employment tax. The remaining money is paid as a distribution is not subject to employment tax.

I hope that the information which I provided was helpful to you. However, if I have not fully answered your question, please post me back on this thread with a clarification.

Customer: replied 8 years ago.
So according to what we calculated we could see a large some of money in our business account this year, if that's the case then a s-corp would keep me from paying a lot more taxes? The company is an equal 50-50 partnership. If we decided to pay oursleves bonuses at the end of the year we could do that with shares of "stock" or incentives?
Expert:  Ellen replied 8 years ago.
Correct. It would seem that the S corp provide the cost savings in your situation.