Llc, s corp, & c corp

Hello,

I am doing the online business now, but I want to form a right company entity and make it legit. I discussed with my CPA today and they suggested to Form a LLC tax as a S corp. The problem is IRS require green card holder or US citizen for the S corp. So i cannot choose S corp as well. Anybody did register the company entity and please tell me more about the information how they register their company?

I would be interested if you find more information about this. Thought about having an online business for awhile now.

Good luck on yours!

somebody can help?

I've talked about this before here.

First and foremost, S-corps cannot have non-citizens/non-residents of the US as shareholders. You being the owner, and thus, likely to be the majority shareholder, are not allowed to be a shareholder of an S-corp. You also have the burden of tons of paperwork during the year, and the added scrutiny that comes with the S-corp designation. S-corps can't be owned by anything like trusts, another S/C-corp or an LLC either, so if one day you want to run a holdings company and want all your businesses under it, you'll be out of luck.

One of the features that distinguishes the LLC from an S-Corp is its operational ease. There are far fewer forms required for registering and there are fewer start-up costs. Filing taxes is a once a year affair on April 15. Single-member LLCs file a 1040 and Schedule C like a sole proprietor and partners in an LLC file a 1065 partnership tax return like owners in a traditional partnership. S-corps may have preferable self-employment taxes compared to the LLC because the owner can be treated as an employee and paid a reasonable salary, but in my opinion, it's not worth the added formalities and regulations.

Additionally, and this is important: LLCs are not required to have formal meetings and keep minutes.

In short, go with the LLC.

If I go with the LLC, and i have to file 1040 and schedule C as sole proprietor, the Tax rate is 15% from the GROSS INCOME. i feel it is not fair, because if your gross income is 100,000, but you deduct all the expenses, and the net income is $10,000 only, then you still have to pay $15,000 which is more than your profit. This is what my CPA tell me. what do you guys think? This is from California. not other state.

That is true. As a single owner LLC, even if you leave retained earnings in the entity's accounts, you still have to account for that income. LLCs exhibit pass-through taxation in which all earnings/losses are passed through the entity and onto its members. Generally, the personal income tax rate is slightly higher than the 15% you suggested, since the 15% is the corporate tax rate on corporate income up to $50,000.

LLC's can elect to be treated as a corporation for tax purposes by filing Form 8832 with the IRS. I believe the form name is "Entity Classification" or something along those lines. You should consider being treated, tax wise, as a corporation. The corporate income tax rates for the first $75,000 of corporate taxable income are lower than the individual income tax rates that apply to most LLC owners which can save you and your co-owners money in overall taxes. Keep in mind, any distributions in the form of dividends are also subject to personal tax.

Nonetheless, you still can't be a member or shareholder of an S-corp without having legal US residence or citizenship.