<p>A relative has started an online business that is making a significant profit. He basically is buying merchandise online and at various online and brick&mortar stores throughout the US and online internationally and then reselling the merchandise online. </p>
<p>He is at the point that he’s thinking about expanding and is exploring the various forms of business structures. He is considering a LLC or a LLC chapter S corporation at this point. Anyone with thoughts?</p>
<p>He will be talking with a CPA and business attorney soon as well, before he dives into this. He has no employees at this time, other than himself. He has been looking over Ava.gov for more info.</p>
<p>Assuming only he is the shareholder, either an LLC or a Corporation with Subchapter S status should be fine. An LLC is a lot easier to operate because you usually have to file fewer forms. But a S corporation allows you to pay yourself a reasonable salary which is subject to certain payroll taxes but treat the rest of the income as a distribution not subject to those taxes. Unless there is sizable profit involved, an LLC work’s pretty well for most people. Of course, the laws vary by state and each state may create separate problems.</p>
<p>Yes, there is a sizable profit and he also has a full time job, where he gets his benefits related to that, including health insurance. Can definitely see attractiveness of an LLC, possibly with a subchapter S. From what I have read so far, a LLC can declare itself a subchapter S corporation. </p>
<p>He will also have to decide what state to incorporate in.</p>
<p>Sorry for typo in original post. It’s SBA.gov that has some useful resources on small businesses.</p>