S-corp or LLC for new software business in the United States


3

Pertaining to a new mISV (software business), should I choose an S-Corp or an LLC. Which would you choose and why?

LLC Incorporation

asked Jul 7 '10 at 01:14
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Phantom Typist
116 points

4 Answers


6

There isn't a definitive answer that's true for every mISV.

The best resource I've read to help you think through the options is LLC or Corporation? How to Choose the Right Form for Your Business from Nolo press. It's written by an attorney for small business owners. It contains a good overview of the issues and considerations.

answered Jul 7 '10 at 01:47
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Keith De Long
5,091 points
  • I second Keith's advice on that book. In fact, all of Nolo's books are excellent. I've been able to find most of the Nolo books at my local library. Some have been worth buying as references, others are one-time reads. This is probably one of those. – Zuly Gonzalez 8 years ago
  • While really worthwhile I do agree it's probably one time read. It's funny that I use the library for travel and fiction and history reading but somehow never thought about looking there for work related books. Great advice on the library Zuly! – Keith De Long 8 years ago

2

This question comes up frequently.

You may find Should I form an LLC or a corporation?, and its related posts, helpful.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

answered Jul 7 '10 at 02:11
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Dana Shultz
6,015 points

1

S-Corp is ideal for a company with fewer than 30 employees and a non complicated ownership/ profit sharing structure. A S-Corp avoids the double taxation associated with corporations by passing profits directly though to the owners at their percent ownership. They also provide legal benefits by sheltering the owner’s assets from litigation in some cases. An S-Corp cannot be formed with more than 30 employees.

answered Jul 7 '10 at 04:08
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Jed Regan
266 points

0

Which jurisdiction(s) will you be operating in?

answered Jul 8 '10 at 03:23
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Henry The Hengineer
4,316 points
  • New York, Connecticut and New Jersey for a start. – Phantom Typist 8 years ago
  • Re: New York, LLCs are subject to an expensive publication requirement in the larger counties, while corps are not. See: http://tinyurl.com/yf3vlwxHenry The Hengineer 8 years ago

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