LLC or corporation

O

ovaclip

Active member
Hey all, i want to start a distribution company for national, international, and personal use. i wanted to know if people start businesses under a LLC, LP, Ltd, corporation or sole proprietorship. i know its mostly not the sole proprietorship, because that one is commonly less reliable and at the same time used sometimes for one person only. im thinking more so on the LLC side of things. main things i want are complete control, as i will be private, plus it would take me a while to get on top of things nationally. what would the difference be in control in a LLC, compared to a corporation? i think so far (correct me if i am wrong please) that with a corporation, to make decisions, you have to consult a board in the company, and that CEO's and COO's are elected based on a board. it seems that a LLC also allows for diverse tax options and the ability to make decisions without having to consult a board?!? what would be better for a film business? distribution as a LLC or corporation. THANKS IN ADVANCE!!!
 
These all sound like good questions for an attorney. It would probably be a good idea to get advice from a good lawyer at the onset, rather than having to undo things later because they are not the way you want them.
 
LLC would be my choice. It will give you the limited liability and protection of a corporate business with the simplified and minimal taxing and filing work of sole proprietership.
 
I'll second kwoff's advice - consult an attorney.
It's also worth noting that you're not stuck with the company legal status forever. You can start out as a sole proprieter, then as you grow the business change the status to an LLC. Later if decide to add a partner you can establish an LP. I think if you set yourself up as an S-Corp you can't change your filing status for five years. The same might be true for being incorporated. The phrases ' I think' and 'might be true' are reasons you want consult an attorney. I can edit like nobody's business, but I'm not an attorney.
 
Speak to both attorney and CPA, the former for legal issues, the latter for financial and taxes.

Keep in mind - If my company hires you to perform a service and your legal entity is not incorporated I will be forced to pay my accountant to prepare a 1099 to send you at year end (providing the charge for services were over some threshhold amount). Given two bidders of equal competency the corp will win the job.
 
J Michael said:
Speak to both attorney and CPA, the former for legal issues, the latter for financial and taxes.

Keep in mind - If my company hires you to perform a service and your legal entity is not incorporated I will be forced to pay my accountant to prepare a 1099 to send you at year end (providing the charge for services were over some threshhold amount). Given two bidders of equal competency the corp will win the job.
Click to expand...

You don't have to prepare a 1099 for every vendor of services your company deals with, do you? You have a plumber fix your pipes, he invoices you, and you pay him ... done and it doesn't make any difference if he's a sole proprietor, LLC, corporation, or what ... or does it?
 
Referencing an email from my CPA, the threshhold in 2007 was $600. To my understanding, if you pay an unincorporated entity in excess of this amount for services during the tax year you are required to file a 1099. An LLC is not an incorporated entity. We had to send one year before last for an IA who we had inspect an airplane. He had his business in an LLC. I was surprised by this since I thought an LLC was treated very similarly to a corp.

IANAAAIDNSIAHIELN :Drogar-BigGrin(DBG)


Steve House said:
You don't have to prepare a 1099 for every vendor of services your company deals with, do you? You have a plumber fix your pipes, he invoices you, and you pay him ... done and it doesn't make any difference if he's a sole proprietor, LLC, corporation, or what ... or does it?
Click to expand...
 
J Michael said:
Speak to both attorney and CPA, the former for legal issues, the latter for financial and taxes.

Keep in mind - If my company hires you to perform a service and your legal entity is not incorporated I will be forced to pay my accountant to prepare a 1099 to send you at year end (providing the charge for services were over some threshhold amount). Given two bidders of equal competency the corp will win the job.
Click to expand...


"Reportable payments to corporations. The following payments in box 7. You are required to keep records showing
payments made to corporations generally must be reported on the date and amount of each cash payment made during the
Form 1099-MISC. year, but you must report only the total amount paid for the year
• Medical and health care payments reported in box 6. on Form 1099-MISC.
• Fish purchases for cash reported in box 7. “Fish” means all fish and other forms of aquatic life. “Cash”
• Attorneys’ fees reported in box 7. means U.S. and foreign coin and currency and a cashier’s
• Gross proceeds paid to an attorney reported in box 14. check, bank draft, traveler’s check, or money order. Cash does
• Substitute payments in lieu of dividends or tax-exempt..."


Always best to check with your duly qualified C.P.A. or Tax Attorney when in doubt.
 
ovaclip said:
Hey all, i want to start a distribution company for national, international, and personal use. i wanted to know if people start businesses under a LLC, LP, Ltd, corporation or sole proprietorship. i know its mostly not the sole proprietorship, because that one is commonly less reliable and at the same time used sometimes for one person only. im thinking more so on the LLC side of things. main things i want are complete control, as i will be private, plus it would take me a while to get on top of things nationally. what would the difference be in control in a LLC, compared to a corporation? i think so far (correct me if i am wrong please) that with a corporation, to make decisions, you have to consult a board in the company, and that CEO's and COO's are elected based on a board. it seems that a LLC also allows for diverse tax options and the ability to make decisions without having to consult a board?!? what would be better for a film business? distribution as a LLC or corporation. THANKS IN ADVANCE!!!
Click to expand...

These are big questions and they are important to do right.

First and foremost you will have to analyze what you are trying to accomplish.

If it is limited liability that can be done with either a Corp (C or S) or an LLC. But, there are tax and compliance implications with these structures just as their are with other business forms.

If you are trying to minimize taxes primarily an offshore parent corporation that actually holds the copyright might be in order.

Ireland has exceptional protections as well as tax benefits for copyright holders.

Corporations and LLCs both have to comply with Federal and then State Law so your questions has a more complex answer than can be answered here.

Your best bet would be to familiarize yourself with the law by reading a book such as Nolo Press's "LLC or Corporation? How to Choose the Right Form for Your Business
The only book that explains each kind of business structure, how they differ and how each will affect your bottom line."

And then seeking specific legal advice from a duly licensed and qualified attorney as well as a duly licensed and qualified C.P.A.

Best of luck to you!
 
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