Categories
Uncategorized

C-Corp or S-Corp?

Let the age and size determine the decision. When starting out, you MUST be an LLC, taxed as a partnership. It’s easiest and most flexible. As you add partners (investors) convert to being taxed as S-Corp, still governed as an LLC. Usually around 3-5 partners. Sometime well before you hit the limit of 100 partners in an S-Corp it will be obvious that C-Corp status is needed, usually because investors demand the formalities and restrictions of multiple classes of ownership (common and preferred shares). Then convert from LLC to C-Corp for both governance and taxes.

Leave a Reply

Your email address will not be published. Required fields are marked *