Do you think LLC or SCorp is better?

[Super Mom]

Thanks for all the input everyone!! Happy Thanksgiving!!!

[luke]

corporate veil

the overwhelming majority of Scorps that I deal with do not really function as SCorps (corporate bylaws, board of directors, anniual meetings etc) - without those Corporate records the shareholders have NO protection from personal liability! Also in WV the LLC "stands alone" - that's why many people form multiple LLCs for different rental properties etc.....
Happy Thanksgiving to ALL!

[JohnH]

I would respectfully disagree with you on that. If legal trouble develops, most of the time the opposing attorneys are not going to delve into the fine details of how well the corporation has maintained its records, unless there are huge sums of money at stake. It is a very expensive proposition to pierce the corporate veil - almost a separate legal matter in and of itself.

[AZUKHiker]

Charging Order Protection

One other good legal reason for choosing an LLC is charging order protection. Here in AZ your personal creditors can force you to sell your ownership interest in a corporation in order to settle creditor liabilities. Hence you lose the business. If you operate as an LLC all they can do is place a charging order on the ownership interest. That means they only get any funds you distribute. No distribution, no funds for the creditors and you get to keep running the business.

[JohnH]

That is interesting. Your post caused me to read up on charging orders - just a quick overview; nothing in depth. One explanation pointed out that charging orders don't protect SMLLC's very well in some states. That's probably due again to the fact that there aren't centuries of legal precedent to draw on, as is the case with corps. It also repemphasizes the potential risks of LLC'a which operate across state lines. But as you stayed, LLC's certainly have a role in business organization.