We have reviewed the considerations for choosing your business formation type between a limited liability company (LLC) or corporation. You have discussed the choices with your startup lawyer. The threshold question you want to ask is whether your small business would qualify for S corporation tax treatment. For many clients, that is the end of the story because their startup has something that would make it ineligible for S corporation tax treatment such as one of the partners is a corporation. If the business meets the S corporation criteria, then the next question is whether it is advantageous to the new business to elect to be treated as a S corporation. As we have discussed in this blog, the clear answer is “it depends.” There are advantages and disadvantages to both S corporation tax status and partnership tax status, but the primary driver for those who elect S corporation status is to try to save self-employment taxes. In the next blog, I will write that there are more dimensions to this decision. We will go over some of the rules regarding distributions, redemption of ownership interests, contributions of goods or services, among some other rules that you may want to talk about with your tax adviser. The rules governing taxation of LLCs are complex and a tax adviser is essential to help guide you through the tax maze.