My wife (us) would like to open a amazon business/online…

An LLC is a hybrid between the LLC and the corporation. There is no tax difference at the Federal level ... S-COrps (as you know) pass the profits to the Owner on the K-1 ... the LLC does it through it the schedule C (or through the 1065's K-1 if taxed as a partnership because there's more than one owner).

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If the recommendation was made by a CPA (or any other tax preparer) they many times recommend the s-corp or C-Corp BECAUSE OF tht extra administrative overhead ... they WANT that business (doing the payroll, W-2's, paying in FICA, doing the quarterly payroll tax forms) .... BUT ... from a TAX perspective (UNTIL you become so profitable ... over and above that IRS required salary that can be some SS&Medicare tx savings, there's no difference.

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and again the LLC does have corporation attributes ... you have to set that up through the secretary of state just as you do the corporation, that corporate liability protection IS a component of the LLC.

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And with the C-Corp ... THERE, you get into DOUBLE taxation. The C-Corp is the only entity that actually pays it OWN taxes, (at corporate rates) ... One of the biggest decisions a C-Corp manager makes is, once the corporation has filed it's tax return and paid corporate taxes, ... do we book that profit to retained earnings, or do we send out dividends (or some of both).

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Whatever dividends ARE paid to the shareholders, (again AFTER the corporation has paid it's own taxes), are taxed to the shareholders again, on the 1099-div (this is the double taxation you hear about with C-Corps)

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But again the LLC is taxed to the owner not the LLC, the S-Corp is taxed to the owner not the S-Corp, the S-Corp comes with much more restriction and overhead, and the C-Corp is potentially doubly taxed, if you take the profits out of the company.

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There really is trade off.

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BUT EVERY ONE OF THESE ENTITIES (the S-corp is not really an entity, it's an LLC or Corporation that has ELECTED to be taxed as an S-Corp) PROVIDES THAT CORPORATE LIABILITY protection, the Only reason I can see that the corporation may have been recommended as the buying entity ... but that piece(corporate liability protection) applies with all of these.

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Where you would NOT get that the corporate liability protection is with a sole-proprietorship or a partnership

If the person that gave you that advice was saying to make it a corporation so that 1099's don't have to be sent, then that would be true (that's one of the exceptions for the requirements to send out 1099s) BUT that only helps the payor not you... you still have to report the gross income (whether it's on the top of a schedule C for a single member LLC, top of an 1120-S for the S-Corp, Top of the 1065 for the partnership, top f the 1120 for the C-Corp) it's still income AND if the payor gets audited there will still be a paper trail of where those dollars were paid (to your organization).

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I'd rather GET the 1099 (unless I were going to try to hide the income) and that will come back around, eventually.

Hope this helps

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If this has helped, Id appreciate a positive rating using the stars at the top of your screen. That's the only way I get credit for any work here.

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BUT if you still have questions, let me know, and if you'd like to discuss any of this over the phone, to go deeper, I'd be glad to make an additional svcs. offer for the smallest amount ($5)

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Let me know

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Lane

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you Should see something on your screen about an additional services offer (I've already made the offer). and all you need to do is accept ... THEN I can enter the office phone number here

here's what I see on MY screen (pasting it in)

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"OFFER ADDITIONAL SERVICE - Status: proposed"

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let me try again...

ahhhh there it ... goes ... entering number now

Here's the IRS site on record keeping we discussed:

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http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Recordkeeping

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Here's a good overview of the LLC setup process in NY

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http://www.nolo.com/legal-encyclopedia/new-york-form-llc-32140.html

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And here;s a quick review of the entities

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Sole Proprietor.. no corporate liability protection ... Files a Schedule C

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Single Member LLC ,,, does have corporate liability protection, but taxes flow through to owner ... files a schedule C

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LLC with multiple owners (members) ... have that same corporate protection at the state level, taxes still flow t owners ... Files a 1065 (partnership return)

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Partnership ... no corporate liability protection... taxes flow to owners

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S-Corp ... a tax election for the LLC or Corporation, so still corporation, tax flows to owners, CAN be some SS&Medicare protection for higher levels of profit

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C-Corp ... does have corporate liability protection, double taxation on profits above the salary

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Enjoyed talking to you

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Lane

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