S Corp questions

Get Legal Help Today

 Secured with SHA-256 Encryption

S Corp questions

I’m opening up a catering company that offers catering platters and single meals. We will also have food booths at fairs and festivals. If I choose S-Corp. Can my husband and I be the only shareholders and responsible parties?

Asked on November 15, 2017 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Yes, you can be: an S-corp can have only two related shareholders (or even only one shareholder, for that matter).
An S-corp. is a very good option. An LLC (limited liability company) is as good and *may* be fractionally better. They both offer the same protection from personal liability against company debts or obligations which you do not personally guaranty.  Assuming you select "pass through," "disregarded," or "partnership" tax treatment (terms vary) for the LLC when you set it up, it has the same tax treatment as an S-corp.
An LLC generally involves slightly less paperwork and reporting than an S-corp., and if you later decide to bring anyone else in (e.g. a parent, sibling, child, etc.), gives you a bit more flexibility in assigning economic rights vs. power/authority: in a corporation, including S-corp., economic participation and power are generally linked, but with an LLC, you can give a "member" more economic participation and less power, or vice versa--whatever you decide and put into the operating agreement.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption