Should I form an LLC or S-Corporation in Florida for a high cash business?

Question

My wife and I are purchasing a non-medical home care franchise in Florida. This will ultimately be a high cash flow business, with revenue is excess of $1 Million. I am leaning towards the S-Corp, for employment tax benefits. Any suggestions?

Answer 1

Hi,

First, for reference I have an MBA and studied business at Harvard. While many people will respond to you on an opinion or something they copy from a web site, my comments are based on years of experience in this field.

Second my answer is, "I don't know". You did a good job explaining the basics of what you are seeking; however, there are some underlying factors which are very important.

- What is your source of funding?
- What is your growth plans?
- What is your exit strategy?
- etc...

Third, although the physical location may be in Florida, there are no regulations stating the corporation must be based there. For example, Delaware has historically offered the most favorable legal decisions/protections and filing through Nevada may dramatically lower the amount of taxes.

In closing, you are on the right track and you are asking a very good question. Choosing the optimal business entity will have a huge impact in the long-term, and changing is extremely expensive. With all that said, I would suggest contacting a lawyer or CPA who works with entrepeneurs in your area and spending a few hours with them to set everything up. This will cost at most a few thousand dollars which is virtually nothing for a business with an annual revenue of $1m.

Hope this helps,

Leo

Answer 2

There's more to it than meets the eye:
1. Partnership:

LLC may be more suitable for external to the family type of partnerships.
If you own the business as an individual, i.e. a sole proprietor style, you or your wife may benefit from an S Corp structure.

If you wan to ensure the partnership status for you or your wife, an LLC would be better.

2. Liability
Is there a risk of getting sued over what your company does?

If yes, LLC or even a C corp may be recommended
If no, S corp is ok.

Remember, the benefits come with their share of negative repercussions. Talk to an attorney and your CPA for free advice.

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Answer 3

You can look at several of the on line incorporation sites that have tons of resources to help you decide. You can also use one of their counselors that will help you decide. There are pros and cons to either filing. For a list of them go here: http://www.nomorecubes.com/incorporation/