Two friends and I are planning to start a web business and were wondering what type of business structure is best forour situation. We intend to do this in our spare time, and we are not planning to seek outside investments or loans,at least for the time being. Our initial project is small in scope, but we feel it will be profitable. In addition,it will give us a chance to try working together and see if we want to try out something more ambitious (our "change the world" project). We're wondering what type of business structure will be best for us.
We would prefer to:
* limit our liability (in case someone has a bad experience because of something from our site)
* keep our business based in our home state (WI), unless there's a strong reason not to
* minimize the need to involve accountants, attourneys, etc.
* Keep taxes simple and avoid double taxation.
We've been looking at descriptions of partnerships, LLPs, LLCs, and S-Corps, but we aren't familiar with all the nuances. Does anyone with experience in this area have a recommendation for our situation? Are there other factors we should be considering here?
It will give you more (a lot more) protection from a legal point of view than a partnership and you still have the same benefits tax wise.
Tax laws regarding llcs vary state by state so plese make sure the above applies to your state.
If you plan on picking up venture capital or doing other things that will require outside partners then you really should look at incorporation, it is my experience that such activities are much easier to undertake when your business is a legal person in its own right (which an LLC is only to some extent).