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Typically, an LLC taxed as a sole proprietorship pays more taxes and S Corp tax status means paying less in taxes. By default, an LLC pays taxes as a sole proprietorship, which includes self-employment tax on your total profits.
One of the reasons many people prefer the LLC over the corporation is that there is more flexibility in how it is managed.
How to start a business in Alabama Choose a business idea. Name your business. Write a business plan. Choose a business structure. Apply for a federal employer identification number (EIN) Obtain business licenses and permits. Examine business insurance options in Alabama. Understand financial considerations.
To conduct an Alabama business search, use the Alabama Secretary of States website, searching by name or entity number. This process can reveal important details about a companys history and legal status. SAVE TIME, START AN LLC WITH US!
In most cases, it is best to start off as an LLC or S-Corporation because these are most suited to minimize your taxes early on AND provide legal protection. Think about whether you plan to raise money. If you do, an S-Corporation is likely to be your best bet. If you dont, its more beneficial to form an LLC.
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The Disadvantages of the LLC Business Structure A major disadvantage of an LLC is that owners may pay more taxes. It can be harder to attract investors with an LLC structure. There tend to be high filing and renewal fees associated with forming and maintaining an LLC.
While every business owner should decide which business structure is right for them based on their business needs and business plan, for most small businesses just starting, it is better to choose an LLC instead of an S corporation.

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