Ask an AI Accountant

A free tool by

Will you have a low to run a business under an LLC or S Corporation if you don't have any employees
AI accountant’s answer:
Deciding whether to run a business under an LLC or an S Corporation depends on your specific situation and priorities. Both structures have their advantages and disadvantages. LLC Advantages: 1. Simplicity: Setting up and managing an LLC is generally simpler than an S Corporation, with less compliance requirements and paperwork. 2. Flexibility in profit distribution: With an LLC, you have more flexibility in distributing profits among members. 3. Pass-through taxation: LLCs benefit from pass-through taxation, avoiding double taxation on profits. LLC Disadvantages: 1. Self-employment tax: LLC members are generally considered self-employed, and may be subject to self-employment tax on their share of the profits. S Corporation Advantages: 1. Pass-through taxation: Like LLCs, S Corporations also benefit from pass-through taxation. 2. Potential tax savings: S Corporation shareholders can split the profits into salary and dividends, which may potentially reduce self-employment tax. S Corporation Disadvantages: 1. More complex setup: Establishing and maintaining an S Corporation requires more paperwork, formalities, and compliance than an LLC. 2. Ownership restrictions: S Corporations have restrictions on the number of shareholders, and are limited to U.S. citizens or resident aliens, among other requirements. 3. Less flexibility in profit distribution: S Corporation shareholders receive profits based on their percentage of ownership, limiting the ability to distribute profits unevenly. Ultimately, the best structure for your business will depend on factors such as business complexity, growth plans, and tax planning strategies. It's important to carefully evaluate the advantages and disadvantages of each structure in relation to your specific situation.
Comment from reviewer
Ieva Ivanauskas, EA
Not Correct.
Icon check
Looks good

Keeper’s AI Accountant

This AI accountant is powered by GPT-4, but has up-to-date knowledge of tax law. It’s been trained on federal and state tax updates for 2023. With credentialed tax professionals fact-checking its responses, it applies IRS rules to real-world situations.

Estimate tax saving

Track and claim every eligible deduction with Keeper

Keeper is the top-rated all-in-one business expense tracker, tax filing service, and personal accountant.