Welcome to Welcome to DNF.com™ - Domain Sales, Domain Forum, Domain Appraisals, Domain Registrars

If you are new to domains and looking to buy, sell and learn about domains then you have come to the right place. DNForum is the largest domain name community on the internet and continues to grow every day. There are over 105,000 domainers on DNForum doing everything from buying domains, selling domains, learning about domains and discussing domains. Take a minute and Register.

Register Today on DNForum IT'S FREE!

Results 1 to 13 of 13
  1. #1
    DNF Addict
    jdk's Avatar
    Join Date
    Jul 2004
    Location
    Florida
    Posts
    7,082
    Country

    United States
    DNF$
    1,173
    Bank
    0
    Total DNF$
    1,173
    Donate  

    S-Type Corp or LLC?

    The size of my portfolio is growing and it is about time to either form an s-type corp or LLC. Does anyone know the pros and cons of each and which you would recommend?

  2. #2
    DNF Regular
    austinandrew's Avatar
    Join Date
    Jul 2004
    Location
    DomainNameWire.com
    Posts
    738
    DNF$
    2,956
    Bank
    0
    Total DNF$
    2,956
    Donate  

    Re: S-Type Corp or LLC?

    Quote Originally Posted by jdk
    The size of my portfolio is growing and it is about time to either form an s-type corp or LLC. Does anyone know the pros and cons of each and which you would recommend?
    It depends on the state you are in. An LLC is generally easier to set up (don't have to deal with stock), but that's just my experience in Texas. (I have an LLC and an S-Corp)

    Here's a good article that explains differences

  3. #3
    DNF Addict
    jdk's Avatar
    Join Date
    Jul 2004
    Location
    Florida
    Posts
    7,082
    Country

    United States
    DNF$
    1,173
    Bank
    0
    Total DNF$
    1,173
    Donate  

    Re: S-Type Corp or LLC?

    I am in Florida. I have been told it was like $450 from my tax guy to set everything up. Otherwise, I can do it online for a little bit cheaper. The stock wouldn't be an issue as I would not sell it out and keep it locked up. As for employees it would be myself for a while and maybe pick up one or two partners in the future. I can either pay them through checks which I would classify as an expense instead of a payroll payment so I wouldn't have to deal with the payroll taxes.

    Other main thing I will apply for is an EIN #. Not sure if you can get these with both types LLC and S-type

  4. #4
    DNF Regular
    gariben's Avatar
    Join Date
    Sep 2002
    Location
    NYC, Tokyo & HK
    Posts
    920
    DNF$
    829
    Bank
    0
    Total DNF$
    829
    Donate  

    Re: S-Type Corp or LLC?

    for both LLC and S Corp, you can apply for an EIN# thur irs.gov

  5. #5
    DNF Addict
    jdk's Avatar
    Join Date
    Jul 2004
    Location
    Florida
    Posts
    7,082
    Country

    United States
    DNF$
    1,173
    Bank
    0
    Total DNF$
    1,173
    Donate  

    Re: S-Type Corp or LLC?

    I have been reading and it seems with an LLC you don't have payroll, rather you "reward" yourself to the money. Is this correct?

    The main reason I am looking to form an s-corp or LLC is because my upcomming project relies on maintaing data. I will be performing hourly backups, but I want to ensure my personal assets in the event data is lost and a client tries to come after me for some reason. I have read an s-type corp is better in these situations. Would an LLC do justice too?

  6. #6
    DNF Regular
    austinandrew's Avatar
    Join Date
    Jul 2004
    Location
    DomainNameWire.com
    Posts
    738
    DNF$
    2,956
    Bank
    0
    Total DNF$
    2,956
    Donate  

    Re: S-Type Corp or LLC?

    Quote Originally Posted by jdk
    I have been reading and it seems with an LLC you don't have payroll, rather you "reward" yourself to the money. Is this correct?

    The main reason I am looking to form an s-corp or LLC is because my upcomming project relies on maintaing data. I will be performing hourly backups, but I want to ensure my personal assets in the event data is lost and a client tries to come after me for some reason. I have read an s-type corp is better in these situations. Would an LLC do justice too?
    An LLC can pay you salary or distributions. But keep in mind you still have to pay self employment tax on distributions. An LLC should provide you the same protection as an S-Corp. But there have been many cases where juries have decided neither provided protection. Be sure to keep separate financial accounts for the business and your personal expenses. And oh yeah, I'm not a laywer

  7. #7
    Platinum Lifetime Member

    Join Date
    Nov 2004
    Location
    Southern California
    Posts
    208
    DNF$
    880
    Bank
    0
    Total DNF$
    880
    Donate  

    Re: S-Type Corp or LLC?

    Quote Originally Posted by austinandrew
    But there have been many cases where juries have decided neither provided protection.
    My Tax guy is not big on 1 person corporations or llc's for this same reason. If its just you the jury/court can very easily "pierce the corporate veil" if all your paperwork and tax and records are not 100 percent perfect.

    If your are going to do it have an attorney or tax rep do the s-corp or llc and have them maintain it, it will cost you more but they will be on top of things and if they mess up and you do lose a lawsuit for improper paperwork and or filings you can go after their professional liability insurance. Also keep in mind you may also need liability insurance or the court may just throw out the corporation and allow the plaintiff to come after you.

    I worked in insurance for 10 years, yes this does happen.

  8. #8
    DNF Regular
    austinandrew's Avatar
    Join Date
    Jul 2004
    Location
    DomainNameWire.com
    Posts
    738
    DNF$
    2,956
    Bank
    0
    Total DNF$
    2,956
    Donate  

    Re: S-Type Corp or LLC?

    Quote Originally Posted by mppedersen
    My Tax guy is not big on 1 person corporations or llc's for this same reason. If its just you the jury/court can very easily "pierce the corporate veil" if all your paperwork and tax and records are not 100 percent perfect.

    If your are going to do it have an attorney or tax rep do the s-corp or llc and have them maintain it, it will cost you more but they will be on top of things and if they mess up and you do lose a lawsuit for improper paperwork and or filings you can go after their professional liability insurance. Also keep in mind you may also need liability insurance or the court may just throw out the corporation and allow the plaintiff to come after you.

    I worked in insurance for 10 years, yes this does happen.
    Good points. If you're worried about getting sued over data backup, you probably want to get professional liability insurance anyway. Or outsource the data backup responsibilities to another company that offers guaranteed service level agreements.

  9. #9
    DNF Addict
    jdk's Avatar
    Join Date
    Jul 2004
    Location
    Florida
    Posts
    7,082
    Country

    United States
    DNF$
    1,173
    Bank
    0
    Total DNF$
    1,173
    Donate  

    Re: S-Type Corp or LLC?

    Thanks for the suggestions so far. As this is starting out small I will likely not need the insurance off the bat. If the site takes off, which I predict it will, then later on down the line I will need to look at larger options.

  10. #10
    DNF Member
    Momentum's Avatar
    Join Date
    Jun 2002
    Location
    Jacksonville, FL
    Posts
    327
    DNF$
    5,351
    Bank
    0
    Total DNF$
    5,351
    Donate  

    Re: S-Type Corp or LLC?

    The main difference between an LLC and an S-Corp is the taxation of profit distributions to business owners/shareholders.

    With an LLC, you must pay self-employment taxes on profit distributions (unless you meet certain loopholes). With an S-Corp, self-employment taxes are not imposed on the company profit distributions.

    Let's say your company generates $500K revenue and has $300K in expenses (including your salary), resulting in a $200K profit. With an S-Corp, you (the company owner) receive this money as a distribution and have to pay income tax on it.

    Well with an LLC, you receive the money as a distribution from the company and you have the pleasure to pay income tax and self-employment taxes. That is an extra 15.3% tax (the current self-employment tax rate) that you have to pay ($30,600).

    There are some other very minor differences between the corporate structures detailed here:
    http://bizfilings.com/learning/corptypes.asp#LLCvsS

    * I am not a lawyer or accountant, so please make sure to confirm everything before making a decision.
    One Word Domains and Good Keyword .com's for sale >> http://www.ModernDomains.com

  11. #11
    DNF Regular
    gariben's Avatar
    Join Date
    Sep 2002
    Location
    NYC, Tokyo & HK
    Posts
    920
    DNF$
    829
    Bank
    0
    Total DNF$
    829
    Donate  

    Re: S-Type Corp or LLC?

    the 15.3% percent tax is your Social Security/Medicare tax.. so theotherotically.. by paying this tax, you are saving for your future if the SS system doesn't break.

    The federal tax, money you give away to Uncle Sam (money that Uncle Sam is paying for the Iraq war, etc.) could be as high as 35%

    Your Income Tax = Social Security/Medicare (15.3% upto to $90,000) + Federal Tax + State Tax + City Tax

  12. #12
    President
    GiantDomains's Avatar
    Join Date
    Sep 2002
    Location
    N-Y-C
    Posts
    6,729
    DNF$
    576
    Bank
    0
    Total DNF$
    576
    Donate  

    Re: S-Type Corp or LLC?

    With s-corp you can claim losses first year, LLC, not. Talk to an accountant.
    NETCHEAP - Discount Dotster Reseller - $7.99
    FREE pushes from your dotster account, renew for $7.99! 1. Create a netcheap account. 2. Push from dotster to netcheap account name. 3. Renew for $7.99!

  13. #13
    DNF Addict
    jdk's Avatar
    Join Date
    Jul 2004
    Location
    Florida
    Posts
    7,082
    Country

    United States
    DNF$
    1,173
    Bank
    0
    Total DNF$
    1,173
    Donate  

    Re: S-Type Corp or LLC?

    I think I am going to have to.

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  

Domain name forum recommended by Domaining.com