What is the difference between an LLC and a non- publicly traded corporation? Also, how much does it roughly cost to start both of those versus a sole proprietorship?
Nowadays you can start an LLC or C-corp for under $500 simply by using a registered agent to set up the name and entity and file the appropriate paperwork. If you use a LLC or C-corp friendly state like Delaware then your annual fees might be around $400 to pay the annual tax and registered agent fee. A sole proprietership is formed the minute you do business for yourself (i.e. lemonade stand) since it is not a legal entity which requires you to file or do anything.
Assuming you don't need to withdraw money from your trading account, which way is better in terms of tax saving? 1. prop account (using K-1) - with prop account, you don't pay any social security tax, and only pay the capital gain 2. retail/prop account under LLC - as a managing member of LLC, you pass through the profit to you individual tax, but you have to pay social security (an extra of around 15%). 3. retail/prop account under C-corp - pay as little as 15% for corp tax, but double taxation if you have to withdraw money (you can avoid it by paying salary or big bonus to yourself). 4. retail account - taxed as capital gain. To me, it seems that trading under LLC is not tax efficient, because the FICA tax will cost around an extra 15%, and why will one want to form a LLC and trade under LLC?
I have a S corp setup. Individual or small group of traders should not opt for C corp. Double taxation. Decided against LLC because I also do consulting work, some companies required CorpToCorp. Not really more paperwork since I use PayCycle.com and Quickbooks to automate most things.
A main reason for forming an LLC is the asset protection and putting up a road-block against charging orders. Another reason is to allow tax planning with regards to self-employment (FICA taxes) since LLCs can be structured to have self-employment earnings and/or not to have self-employment earnings.
This is for a Medical Staffing business. If I go with Delaware, do I need to have an office in Delaware? I work from home in GA.
Yes you do. I originally thought about doing my LLC in Nevada, but since I trade in Denver, I could get busted and so could you if you don't operate in Delware. It's called Nexus for corps., check google.
Is there any disadvantage to just staying a sole proprietor versus setting up an llc or corporation? I do have independent contractors that work for me as well from home in several different states.
If anyone has used this service, can you please comment on them... https://www.instacorp.com/index.cfm