I'm deciding on which one to choose. An LLC or a corporation. I'm about to buy a business and am wanting input. I'm leaning towards having an LLC that just has a bunch of DBA's if I buy more than one store or more than one business.
It it's going to be a Texas LLC or Corporation, you should definitely go LLC. They're basically the same, but you get limited liability.
The "liability" protection aspect is really pretty shallow and is the same for both. Any litigator will tell you that they don't care what you were told by a $750/hour transactional attorney. Same/same. There may be other economic reasons to choose one form over another e.g., recordkeeping, tax treatment, etc., but it's never been a concern of mine.
There are tax advantages to going Sub-S corporation that are not available for LLC. If you plan on having investors or giving someone a preferred return, LLC is your choice over Sub-S. The liability protection is a wash between the two. Get a business attorney and an accountant on a conference call before you decide.
Cost is $300 through the sect. of state office. You get your tax id through the irs site which is free.
the bigger issue is having legal representation for the purchase of a business. that's serious stuff.
if the company is mostly a service oriented business and you're buying the "client list", database, etc.., it's going to be mostly goodwill, correct?
accounting for the purchase price is about 10% of the deal in buying a business. I've represented many clients in the purchase or sale of a business. I've also bought 3 businesses myself and sold 1 (for a profit), still have 2. Feel free to PM me if you'd like to discuss.
I must say that I have been lurking/posting on Hornfans since 1999 and I'm still impressed on the plethora of advice from experts which will give someone a direction to go.......Best "all around" website on the web....
As someone already mentioned, Sub-S is simply a tax election. You can organize as an LLC and still elect to be treated as an S-corp for federal tax purposes. Generally, LLC's are easier for small businesses. No annual meeting requirements for directors and shareholders, etc. I'm not familiar with the Texas LLC statutes, but LLC's often offer the benefit of "charging orders" as another limiting factor in case of a lawsuit down the road. Talk to an attorney who deals with this stuff in your area. It will pay off in the long run.