Choosing between an LLC, an S corporation and a C corporation affects your personal liability, your paperwork and the taxes you pay every year. Justin Esshaki is an attorney and a CPA, so he can weigh the legal and the tax side of that decision together, then file everything with the State of Michigan.
Most owners pick an entity once and live with it for a long time. The choice decides how profits are taxed, whether you pay yourself through payroll or distributions, how easily you can bring in a partner, and how much tax you pay when you eventually sell. Changing course later is possible, but it usually costs more than getting it right at the start.
A limited liability company (LLC) is a legal structure created under Michigan law. An S corporation is a tax election, not a separate kind of company. Many Michigan small businesses form an LLC for its flexibility and liability protection, then elect to be taxed as an S corporation once profits are high enough that the payroll tax savings outweigh the extra payroll and filing costs. A C corporation can make sense for companies planning to raise outside investment or keep earnings in the business.
There is no single right answer. The best structure depends on your expected profit, how many owners you have, whether you plan to raise money, how you want to pay yourself and how you might eventually exit the business.
Formation is often split between two advisors: a lawyer files the paperwork and an accountant handles the tax elections. When those conversations happen separately, details get missed. Because Justin is both, the articles you file, the operating agreement you sign and the tax elections you make are designed to work together from day one.
Esshaki Law works with founders and growing companies in Southfield, Detroit, Troy, Farmington Hills, Bloomfield Hills, Novi and throughout Oakland, Wayne and Macomb counties. Meetings are available in person at our Southfield office or by video.
A side-by-side comparison of LLC, S corporation, C corporation and partnership options based on your income, owners and goals.
Drafting and filing your formation documents with the Michigan Department of Licensing and Regulatory Affairs (LARA).
Obtaining your federal Employer Identification Number and filing elections such as the S corporation election (Form 2553) on time.
Setting ownership percentages, capital contributions and how profits and losses are allocated among owners.
Governing documents that match how you actually plan to run and pay out of the business.
Converting a sole proprietorship, changing your tax classification or reorganizing ownership as the company grows.
Registering a company formed in another state to do business in Michigan.
Annual statements, payroll setup for S corporation owners and the first business tax return.
An S corporation election can lower self-employment taxes for some owners, but it also requires payroll, reasonable compensation and careful distributions. You see the full picture before you decide.
Documents are drafted to fit your tax treatment, so you avoid amending agreements and refiling elections later.
Through Esshaki & Associates, the same team can prepare your business tax returns, keeping legal records and tax filings consistent.
We discuss your business, owners, income and plans for growth or sale.
You receive a clear recommendation on entity type and tax treatment, with the reasoning behind it.
We prepare and file your articles with LARA, obtain your EIN and file any tax elections.
We draft your operating agreement or bylaws and walk you through your first-year obligations.
They are not alternatives in the way most people think. An LLC is a legal entity; an S corporation is a tax election. Many owners form an LLC and later elect S corporation tax treatment when profits make it worthwhile. Whether that makes sense for you depends on your income, payroll costs and plans, which is exactly what a consultation sorts out.
Online filings with LARA are often processed within a few business days, and the state offers expedited service for an additional fee. Obtaining an EIN and preparing your operating agreement can usually be completed in the same period.
Michigan does not require you to file an operating agreement with the state, but having one is strongly recommended, especially when there is more than one owner. Without one, the default rules of the Michigan Limited Liability Company Act apply, which may not match what the owners intended.
Generally, Form 2553 must be filed no more than two months and 15 days after the beginning of the tax year the election is to take effect. Relief for late elections is sometimes available. Timing matters, so it is best to plan the election alongside formation.
Yes. We frequently review entities formed through online services, check that the filings and elections are correct, and add the operating agreement and tax planning that were left out.
Yes. We serve owners throughout Michigan, with in-person meetings at our Southfield office and video meetings for clients farther away.
Tell us briefly about your business and what you need. We’ll reply within one business day.