Question

Bob, who is a close friend, has decided to start his own consulting firm. He has received conflicting information regarding the best business structure to reduce his tax liability. He will be the only employee; however, he is willing to consider creating an S-Corporation.
Compare and contrast the benefits of Corporations, LLCs and S-Corps and make a recommendation regarding which would be the most advantageous for Bob. Defend your position

Answer 1

C Corporation	LLC	S Corporation
It is a separate entity so the owners of the business are not liable for creditors claims	Business and personal assets are different.	Business is not taxed but the income of the owners is taxed
This is good if you want flexible profit sharing among the shareholders	In LLC, there is flexibility in accounting methods as LLC do not use accrual method of accounting	This is good if you want to set the salaries of the employees to reduce the tax on social security and medical.
Good for big business	Good for small business	Good for small business

Bob should either go for LLC or S corporation. Being in S corporation, Bob can avoid double taxation on the income.