I'm considering starting a business in the state of Rhode Island in the USA. I've begun to do the research on options available to me, and it's clear already that there is a dizzying array of options for which legal business entity to choose for my business.
- C corporation
- sub-S corporation
- Limited Liability Company (two options here, one where the company income is treated the same as my own personal income with regard to federal and state income taxes, and the other where the company income is treated separately from my own personal income)
For anyone that's already been down this road, please offer some specific factors to consider in choosing the right legal business entity in RI for a consulting firm with two options: (1) no anticipated retail sales at all, (2) a small amount of retail sales with most income anticipated to be only from professional services rendered.
For example, my accountant tells me that if I expect to have more than 10 employees then a sub-S corporation is a better solution because I won't be paying as much in taxes. If I recall correctly, with a C corporation, corporate profits are essentially taxed twice, one time for the corporate profit and another time for my personal income. He said this causes most C corporations to try to show a close to zero profit at the end of the year as possible, and that many of them end up re-organizing as sub-S corporations.
Maybe there are other factors to consider as well.