Inc. or LLC

Which is better?

[mdean]

I plan on starting a new venture with a partner next month. Can anybody give input on which is better Sub chapter-S corporation or LLC?

I don't know if these issues matter, but I'd like to be able to provide health insurance and a 401k down the road.

I hear there is more paperwork with sub chapter s, but are their also recurring fees when going this route?

[syber]

I prefer an LLC that is taxed like a C corp. You have more opportunities for deductions and benefits. If you need to retain some earnings in the LLC for capital expenditures, the first $50,000 in earnings each year are taxed at a low rate.

Sub S has the advantage of not being taxed for FICA on dividends, but I don't expect that will always be the case in the future.