Which Entity?

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  • #38584
    Ralph Nelson
    Participant

    I am a sole proprietor and want to change to an entity. I am a one man shop with no assistant. I am 70 years old and want to grow the business for the next five years, sell it, and then retire. Any suggestions on which entity to change to?

    #38702
    Eric Green
    Keymaster

    Ralph I would create an LLC. C Corps are popular for doing this because people seek out venture capital money and a C Corp allows for all sorts of various share types and ownership. But given what you have laid out I would recommend a single member LLC, which is cheap and easy to create and manage. Whatever you sell it will be the assets – no buyer will want the entity anyway, so I would not sweat this too much.

    #38743
    Ralph Nelson
    Participant

    Taxed as an S-Corp?

    #39274
    Eric Green
    Keymaster

    Once you have staff then yes I would S Corp it. If it is just you there is really no benefit to an S Corp – courts have held that, if it is 1 person owner working in the S Corp there is no rationale for splitting wages and non-wages. But once you also have employees then there are potential tax savings in being an S Corp

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