Question:  What are the advantages of an LLC over an S corporation?    Should I form an LLC for my Clothing Store? 

What is an LLC?

• Originated in the late 1970s in Wyoming
• LLC offers the tax advantages of a partnership along with the liability protection of a corporation.
• LLC does not require members, to comply with the formalities of a corporation.

So, the question s:  is an LLC always the best choice?

The word "always" does not sound good to lawyers.

Well, first, states make a lot  of money from state created corporate entities such as LLCs.  Thus, they make it easy even for one member LLC to be created.

I am thinking of starting a clothing store.  I need an explanation of what an LLC is and difference between llc and S corp.  That is, LLC versus S corporation.   Also, since I will most likely be creating an LLC, is an LLC a corporation?  Finally, do all LLCs require an LLC operating agreement?  Do LLC members have the same rights as shareholders in a Corporation?

 LLC is the the preferable corporate entity when it comes to choosing an entity for small businesses. In some cases, however, an LLC is at a disadvantage compared to an S Corporation.

Before we continue, you need to register your clothing business with a Business License, 2. Obtain a Sellers Permit  to be able to sell clothes, 3. File for a Federal Tax ID Number, 4. Get a State Employer Identification Number, because you will hire employees, and 5. Filing a DBA or instead of a DBA you can incorporate or form an LLC. Thus alternatively, you can form an LLC limited liability company or Incorporate your business and then you will not need a DBA Business Assumed Fictitious Business Name Certificate because there will not be an assumed business name involved.

Register a federal tax id, and obtain a state employeyr number because employers need both of these numbers to report unemployment and withholding taxes.  Thus, getting an LLC is part of the licenses you need to start your business and it is not a substitute for a business license.The IRS does not recognize single owner LLC or LLCs for tax purposes. Instead, it regards a single owner LLC as  sole proprietors.  The implication is that  you need a schedule C your  tax return.   In addition, the single member  must pay  self-employment tax on the LLC profit.Thus, if you are a single owner LLC, don't do the LLC because an S corporation is a better than the LLC for tax purposes.   An S corporation requires more paperwork than an LLC but it is not that much for just one shareholder.  

To avoid paying the full amount of self employment tax with an S corporation, simply pay yourself with dividents instead of  payroll.  The amount of the divident must be determined as you will also take into account whether you are getting a reasonable S corporation Salary. 

 In fact, namely, the LLC or corporation is a good choice for your clothing company name is not a fictitious name because it is the legal name of the legal person that the corporation becomes subsequently to its legal recording of the business document. You need to get a business license because all business are required to get one. File a seller's permit because the items you sell are taxable and you need to collect sales tax.

In SC the fee is $199 but it could change.