What's the best business structure for auto parts store?

LLC, INC, ...?



Thank youWhat's the best business structure for auto parts store?
LLC. It gives your personal assets the same protection as a corporation, but is easier to setup.What's the best business structure for auto parts store?
A corporation, chartered by the state in which it is headquartered, is considered by law to be a unique entity, separate and apart from those who own it. A corporation can be

taxed; it can be sued; it can enter into contractual agreements. The owners of a corporation are its shareholders. The shareholders elect a board of directors to oversee the major policies and decisions. The corporation has a life of its own and does not dissolve when ownership changes.



The LLC is a hybrid business structure now permissible in most states. Its designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. Formation is more complex and formal than that of a general partnership. The owners are members, and the duration of the LLC is usually determined when the organization papers are filed. LLC's must not have more than two of the four characteristics that define corporations: Limited liability to the extent of assets; continuity of life; centralization of management; and free transferability of ownership interests. Owners have limited personal liability for business debts even if they participate in management. Profit and loss can be allocated differently than ownership interests. IRS rules now allow LLCs to choose between being taxed as partnership or corporation.

Take into account the following when deciding business formation:

Your vision regarding the size and nature of your business.

The level of control you wish to have.

The level of "structure" you are willing to deal with.

The business's vulnerability to lawsuits.

Tax implications of the different ownership structures.

Expected profit (or loss) of the business.

Whether or not you need to re-invest earnings into the business.

Your need for access to cash out of the business for yourself.



Advantages of an LLC :

Has no limit to the number of owners

Owners can report profit and loss on their individual tax returns

Not required to hold annual meetings or record minutes

Advantages of a Corporation:

May issue shares of stock to attract investors

Corporate income splitting may help lower overall tax liability



Disadvantages of an LLC:

Cannot engage in corporate income splitting to lower tax liability

Cannot issue stock

Disadvantages of a Corporation:

Double taxation of corporate profits and shareholder dividends

Must hold annual meetings and record minutes

S Corporations have restrictions on number of owners