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Hiring Independent Contractors: LLC or Corporation?

Asked by: Susan - 12 January, 2012
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/default.png-f1597c1da25f30f8c1a941405e8391c8 We are starting a business where we hire independent contractors to do the work, should we be incorporated or should we have an LLC?
Answered by: Alec Green - 13 January, 2012
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/2.jpg-d85fc946de818bb769fdd6ce8cd95478 Susan,

I think your choice of LLC vs. Corporation would depend less on whether you hire independent contractors or not, but on what type of business that is to begin with, and who are the owners of this business (US or non-US, persons or entities).

If you are cost sensitive then it would also depend on the state of formation.

It would be a good idea to discuss your situation with a CPA and/or an attorney before making a final choice of entity type. Just keep in mind that LLCs are more flexible in terms of taxation, while corporations are more flexible in terms of ownership allocation (but do consult a CPA/attorney for further details).

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