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There are disadvantages to both LLC and Sub-S, in the case of the LLC you must have two members in the Sub-S one will do. Employment taxes was the only issue I pointed out (Social Security) and in this case the business owner had other members doing part or maybe most of the work, the Sub-S allows the transfer of Profits to the Stockholders return without the payment of Employment Taxes and by-passing Corporate Taxing as well as the LLC, but in this case the LLC would impose the owner to Employment taxes (Social Security) at the given rate of 15.3%.

Some other disadvantages of the LLC may be the limit of life under some States laws, 50% sell off or exchanged within 12 months the LLC will terminate for federal tax purposes, cannot issue 1244 stock, may not be permitted to operate in more than one State, Some States tax LLCs, and many others.

Its just one area thats not cut and dry.

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