Thread: LLC Single member as S corp vs LLC sole proprietor

Currently I am set up as a single member LLC S corp in NC. My tax advisor has indicted that it may be better to set up as a LLC sole proprietor for tax purposes. What are your thoughts? Would it be any easier to pierce the corporate veil as am LLC sole Prop vs LLC single member s corp. How are other set up?

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Originally Posted by ren ramsey

Currently I am set up as a single member LLC S corp in NC. My tax advisor has indicted that it may be better to set up as a LLC sole proprietor for tax purposes. What are your thoughts? Would it be any easier to pierce the corporate veil as am LLC sole Prop vs LLC single member s corp. How are other set up?

Hi Ren,

Interesting. I have not heard of an LLC S-Corp. Not that I am an attorney or accountant. I am set up as an S-Corp. This was on the advice of my attorney and, frankly, I do not remember all of the pros & cons of both. One was the way the taxes were done and the S-Corp seemed the better choice.

You really need to contact an attorney to get the benefits vs. pitfalls of both. A former HI once told me the best bet was to not carry insurance, put all assets in my wife's name and rent my bed. Can't get blood from a turnip. He was only partly kidding, I think. The next best is to be sure you carry adequate insurance. I suspect that insurance is more important in protecting your assets from a lawsuit than what type of business structure you have.

As far as taxes go. I pay my taxes, I pay an accountant and I swear. Can't do much else.

If you are a one man operation, the "Corporate Veil" idea has little benefit. Any first year law student can get around that. Do what is best for your tax planning. Use the money you would spend on trying to maintain the "corporate veil" on liability insurance. But like Gunnar said, ask your attorney, not a bunch of home inspectors.

What Gunner and Jim said. Ask a professional.

An Accountant looks at the $$$$ and the Lawyer looks at the separation of liability.
A one man show in a corporation is a little hard to hide in court, personal thought.

You need to put the Lawyer and the Accountant in a dark room to battle it out and see you comes out the winner.

Here is a little something to read for those interested in the delineations of models, tax and liability.

LLC Electing S Corp Status--The Best of Both Worlds | BizFilings Toolkit

Originally Posted by ren ramsey

Currently I am set up as a single member LLC S corp in NC. My tax advisor has indicted that it may be better to set up as a LLC sole proprietor for tax purposes. What are your thoughts? Would it be any easier to pierce the corporate veil as am LLC sole Prop vs LLC single member s corp. How are other set up?

Jim is right. Ask the pros. I will say though that when I did that, lawyers and accountants weren't on the same page. I did a lot of research and picked LLC.

Feds don't recognize it so you choose to pay taxes as a sole-proprietor or corp. I chose sole prop so I wouldn't have to pay taxes on business profit AND personal.

Jim is also right in that LLC will NOT protect you from negligence. LLC's protect those who invest in them, not the actual worker.