Me & 3 other friends want to open up a business that provides tech services. Should we create LLP,LLC,or Corp

Question

We have 4 members total and we will all be providing services to our clients and the income will be distributed evenly. We want to choose a type of company that will be most beneficial in terms of taxation and of course something that is simpler to create and manage is better. Just can't decide to go with general partnership, limited partnership, limited liability partnership, or even sole proprietorship. Thanks!

Answer 1

start with partnership, then if it goes well,, incorporate and file for sub chapter S to have a s corp.
forget the LLC

Answer 2

The following link is an article that covers the different options for registering your business with the Secretary of State’s office (in the state that you choose) and the tax implications of that business structure. There are three important considerations when considering business structure: 1) Number of owners and complexity of ownership, 2) liability of the potential venture and assets at risk, and 3) Tax Issues.

http://www.diybizplan.com/default.php?act=11&catid=74&id=70

From personal experience I can tell you that you usually want seperation of personal and business assets which means general partnership is out.

You don't have enough owners to necessatate a C-Corp. Because you are a startup the benefit from a Subchapter S (or S-Corp) will not be more than the hassle/cost of maintaining a corporation.

Therefore what is left over is Limited Liability Partnership or Limited Liability Company...either of which will do fine.

Both will provide limited liability protection along with simple registration and an uncomplicated tax structure (exactly like a general partnership).

Good Luck
Mr BizPlan

PS - At some point when the partners are reporting a high enough level of taxable income you should speak with your accountant about changing the legal structure to a Sub-S due to the Self Employment Tax savings.

PPS - Unless you plan on owning seperate businesses Sole Proprietorship is not an option.

Answer 3

u say u have 4 members? understand the serious legal problems of partnerships.
4 members legaly can be affected by spouses, exspouses, children smart and dumb, death, addictions and moral weaknesses. suggest NO partnerships.