[Everything doTERRA] Re: LLC vs S or C Corp

Hi Evie,

The LLC and S corps are for small businesses but they affect your IRS 1040 in different ways. Definitely talk with an accountant and possibly an attorney as well since the attorney is the one who will draft the incorporation documents for you. There are lots of issues to consider that are specific to your situation that we really can't help with. When I opened a small business in the state of Washington, I chose the S corp option, after researching and comparing it with the LLC. Given my specific situation it made more sense.

That said, here is a great source for more info about the differences between LLC and S corp. It's a page from the Small Business Administration website and it's pretty clear about explaining the differences, etc.: http://www.sba.gov/community/blogs/community-blogs/business-law-advisor/should-my-company-be-llc-s-corp-or-both

Reading the pros/cons sections of each, the first thing that jumps out at me is that if one of the members of an LLC dies, so does the LLC. Given that much of the income from a direct sales company like doTERRA is residual (ongoing), then the LLC would be less attractive to me for that reason alone. An S corp is a regular corp, bound by slightly different "rules" than a C corp because the S corp is designed for small businesses. In the articles of incorporation for an S corp, somewhere very near beginning of the document will be a paragraph that says: "The duration of this corporation is perpetual." So the S corp will outlive it's incorporators.

Merry Christmas!

Liz

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