Starting an LLC vs. an S-Corp in Los Angeles: How to Get Started
Starting a business in Los Angeles can be a daunting task2 min read
Starting a business in Los Angeles can be a daunting task. Navigating the city's local regulations and legal processes can be complex and overwhelming. For business owners looking for legal guidance, there are a number of options to consider, such as creating a limited liability corporation (LLC) or an S corporation (S corp). This article will explore the differences between these two organizational structures, their advantages and disadvantages, and how to get started in Los Angeles.
An LLC and an S corp are two of the most popular business structures available for entrepreneurs in the United States. Both types of business provide the owners with liability protection and taxation benefits. But there are fundamental differences between them that must be understood before making a decision.
The main difference between an LLC and an S corp is their taxation structure. An LLC follows a pass-through taxation model, which means that the owners pay taxes based on the profits of the business. An S corp has a double-tax system, in which the income is taxed twice — once at the corporation level, and then, after being paid out to the shareholders, a second time.
Advantages of an LLC include the ability to protect personal assets from creditors, greater flexibility and autonomy in terms of structuring how the business is run, and the ability to easily pass the business on to heirs without paying additional taxes. Disadvantages of the LLC structure include the lack of scalability, less protection from creditors, and potential issues with taxation.
The advantages of an S corp are the double-taxation system, which can provide business owners with greater tax savings; the ability to easily transfer shares without being subject to complex taxation laws; and the ability to raise money through the sale of additional shares. Disadvantages of the S corp include the complexity of the paperwork required to establish it, as well as the greater scrutiny they are subject to from the Internal Revenue Service (IRS).
Business owners in Los Angeles have a variety of options to get started in terms of legal counsel. UpCounsel is an online marketplace for legal services that connects business owners with experienced attorneys in the area. The company’s network of lawyers can offer guidance on a variety of topics, from understanding local regulations to establishing a business with an LLC or S corp structure. With UpCounsel, business owners can access experienced attorneys on demand and benefit from advanced features such as profiles of the online attorneys that display client ratings and reviews of recent work.
When it comes to establishing a business in Los Angeles, it is important to understand the differences between an LLC and an S corp, as well as their advantages and disadvantages. In addition, business owners should consider seeking out experienced legal counsel to understand local regulations and ensure that the business is properly registered. UpCounsel can be a great resource for business owners looking for guidance on setting up an LLC or S corp structure.
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