LLC vs S-Corp in New Hampshire

Making choices as an entrepreneur is a big challenge, especially when choosing what business structure to form in New Hampshire. When it comes to a business structure, you can choose whether to have a C-corporation, S-corporation, Sole Proprietorship or an LLC in New Hampshire. Before you start New Hampshire LLC filing, you must compare which structure suits you. You might be considering two popular options: a Limited Liability Company (LLC) or an S Corporation (S-Corp). Both of these structures offer distinct advantages and protections, but selecting the right one depends on various factors, including your business goals, tax preferences, and management style.

If you are confused with New Hampshire LLC vs. S-Corporation, and thinking which one is better and more suitable for the business that you will form, there are a few things that you should consider. Before we get through this article, you should understand what an LLC and S-Corporation mean in New Hampshire.

LLC vs. S-Corp: Definition

While forming an LLC, you must follow some major steps. It is a business structure that protects your personal assets from getting affected by business liabilities. On the other hand, the S Corp is not a conventional business structure, but it is tax status that your can file with the IRS. S Corp does not provide personal asset protection like an LLC. Here are the detailed definitions of the two-

What is an LLC in New Hampshire?

A limited liability company (LLC) is a formal business structure that provides personal asset protection. Under this structure, the LLC owner/member can save his/her personal assets in case the business is in debt or is being targeted with a lawsuit. In some special cases, if your company is legally sued, the other party can go after your personal assets. This is called piercing the corporate veil, where you become personally liable for the company’s debt.

Forming an LLC in New Hampshire gives you a pass-through tax benefit where you don’t have to pay an income tax based on your business revenue; instead, the income tax will be calculated based on your personal income.

What is an S-Corp in New Hampshire?

An S-Corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for corporations and LLCs but in different ways. S-Corporation is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

S-corp is a prominent alternative to the LLC. Unlike a conventional C-corp, S-corp is more suitable for small and medium businesses, such as businesses with 100 shareholders.

LLC Vs. S-Corporation: Which is More Preferable in New Hampshire?

In New Hampshire, forming a business is crucial since you need to be adequate in your decision, especially when you think if New Hampshire LLC or an S-Corporation in New Hampshire is preferable. An S-Corporation is a tax classification that some small businesses are qualified for, whereas an LLC is a legitimate company form. By submitting a document to the Internal Revenue Sector (IRS), corporations and LLCs can choose S-Corporation taxation. An S-Corporation can be less formal than forming an LLC and doesn’t normally provide the same protection. Also, unlike LLC, S-Corporation in New Hampshire doesn’t provide the same protections entrepreneurs seek from an LLC. It’s important to consider your options when launching a business from a legal and tax point of view.

It is better to consult a legal professional before you set up an LLC or S-corp. We shared basic differences and how you can form an LLC and S-corp. But it is always recommended to consult a professional before making any decision.
– LLCBuddy Editorial Team

Tax Difference Between New Hampshire LLC and S-Corp in New Hampshire

There is a difference between LLC and S-Corporation when it comes to paying taxes. Based on Federal and State Tax differences between the two, you can determine if S-Corporation or LLC in New Hampshire is suitable for your business.

Federal Taxes: There are a few federal tax factors to consider when selecting whether to operate an LLC or S-Corporation in New Hampshire. Tax differs in terms of Pass-Through Taxes and Self-Employment Taxes.

Pass-Through Taxes: LLC and S-Corporation in New Hampshire are the same in terms of pass-through taxation at the federal level. LLCs and S-Corporations do not pay federal income taxes as separate legal entities because of pass-through taxation. Only their owners are required to pay federal income taxes on their portions of the business income. The company does not pay twice the tax in this kind of taxation. Unlike LLCs and S-Corporations, C-Corporations in New Hampshire are mandated to have double taxation. It means that they must pay federal taxes at the entity level.

Self-Employment Taxes: Most LLC owners choose S-corporation taxation in New Hampshire to reduce their self-employment taxes. This is because if you own an S-corporation, you are not required to be self-employed. Instead, you can join the company as an employee and receive regular salary benefits. On the other hand, an LLC member must include their guaranteed payments and a portion of the LLC’s earnings in calculating their self-employment tax. Distribution of shares defines S-Corporation shareholders in terms of their corporate incomes.

Consider the scenario where you are the only owner of an LLC in New Hampshire with a $150,000 annual profit. And let’s say that $100,000 is a fair wage in your location for someone doing the same job as you. Under the default LLC taxation, you must pay self-employment taxes on the entire $150,000 profit. But, if your company is taxed as a New Hampshire S-Corp, you will only be responsible for paying payroll taxes on the standard wage of $100,000. Income tax will still apply to the remaining $50,000.

New Hampshire State Taxes: At the state level, there aren’t any significant tax differences between regular LLCs and S Corporation LLCs. In terms of the annual LLC fee in New Hampshire, it costs $100 that can be paid to the NJ Department of Treasury. Of course, before forming the whole LLC, you must pay the initial fee of $100.

On the other hand, you also need to pay taxes if you form an S-Corporation in New Hampshire; besides, you must pay the S-Corp filing fee and an annual report fee after a year of establishing your S-Corp. You must also go to the NJ Department of Treasury to pay this.

How do New Hampshire LLCs and S-Corporations Handle Liability Protection?

In New Hampshire, you have no personal responsibility for the financial and legal liabilities of an LLC you will form. An S-Corporation does not provide liability protection because it is a tax designation rather than a distinct business entity. Whatever liability defense an S-Corporation provides is provided by the underlying business entity that chose the tax status. You will have the liability protection the LLC offers if it chooses S-Corporation status for tax purposes.

LLC Vs. S Corporation Ownership Requirements Comparison

Strict ownership requirements exist for LLCs and S-Corporations in New Hampshire. LLC ownership regulations are strict because a new member can only be accepted with the approval of all existing members. On the other hand, S-Corporation ownership regulations are also strict because only specific people are permitted to become shareholders. Also, an S-Corporation can’t have more than 100 shareholders and needs one class of stock.

The following are the reasons why some cannot be shareholders in the S-Corporation in New Hampshire.

Insurance business
Domestic and International sales corporations
Partnerships
Corporations
Unauthorized Immigrants
Certain financial institutions

Although you know most of the reasons regarding the ownership requirements of both LLC and S-Corporation, you should still seek legal advice in preparation for your business and it is best to visit LLCBuddy for your New Hampshire LLC or New Hampshire S-Corp.

Which is Easier to File in New Hampshire: LLCs or S-Corporations?

Filing an LLC or S-Corporation in New Hampshire takes time and preparation. Even though it is not as easy as it seems, something manageable still makes it not difficult. LLC and S-Corporation can be filed by New Hampshire Registered Agent. However, in order to establish an LLC in New Hampshire, you must submit a Certificate of Formation to the New Hampshire Secretary of State. Your Certificate of Formation must contain information for your LLC, along with payment of the associated filing fee.

In addition, you need to submit more papers to make the New Hampshire S-Corporation election. File a Form 8832 to inform the Internal Revenue Sector (IRS) that you prefer to tax your LLC as a corporation rather than a partnership. Then you will then submit Form 2553 to choose S-Corporation status.

Do not forget that you must submit annual tax returns and reports after creating your LLC in order to maintain legal compliance.

Important Information

Who Pays More Taxes, an LLC or S-Corporation?

Taxes differ for LLC and S-Corporation in New Hampshire because it depends on the tax purposes and how much profit will be generated. Usually, LLCs are frequently taxed at personal rates and LLC owners can elect to be treated as a separate company with its own federal tax identification number.

On the other hand, owners of S-Corporations must receive a salary that includes Social Security and Medicare taxes. The owner, however, can get dividend income or some of the leftover profits, but not as an employee; thus, they won’t be subject to Social Security and Medicare taxes on that money.

Should I Convert an LLC to S-Corporation?

Since your business assets are separated from your personal assets if you’re a sole proprietor, it may be advisable to form an LLC. You are not restricted to modifying the structure of your LLC to an S-Corporation. Although an S-corporation must have a board of directors, a maximum of 100 shareholders, and adhere to more regulations, it would be ideal for more companies with more shareholders.

How to Structure an LLC to S-Corporation?

To structure an LLC to S-Corporation in New Hampshire, you must submit Form 2553, Election by a Small Business Corporation, to the IRS in order to choose S-corp taxation. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In New Hampshire, you can file your form 2553 in the Department of the Treasury Internal Revenue Service Center – Kansas City, MO 64999 Fax: 855-887-7734.

FAQs

Is there a difference between LLCs and S-Corps in New Hampshire?

Yes, LLCs and S-Corps are two distinct business structures in New Hampshire. LLCs are limited liability companies that provide liability protection and tax flexibility, while S-Corps are corporations that provide liability protection and have the ability to be taxed as pass-through entities.

Does New Hampshire have any special rules for LLCs and S-Corps?

Yes, New Hampshire has several specific requirements for LLCs and S-Corps that must be followed in order to be properly organized and maintained. These requirements include filing the appropriate paperwork with the New Hampshire Secretary of State, appointing a registered agent, and filing the appropriate tax returns.

Is there a difference between the taxes for LLCs and S-Corps in New Hampshire?

Yes, LLCs and S-Corps are subject to different tax rules in New Hampshire. LLCs are generally taxed as pass-through entities, meaning the profits and losses flow through to the owner’s personal tax returns. S-Corps, on the other hand, are subject to double taxation, with the profits and losses first taxed at the corporate level and then at the individual shareholder level.

What are the filing requirements for LLCs and S-Corps in New Hampshire?

To form an LLC or S-Corp in New Hampshire, you will need to complete and submit the appropriate paperwork to the New Hampshire Secretary of State. LLCs must file a Certificate of Formation and S-Corps must file Articles of Incorporation. Both entities must also appoint a registered agent in the state of New Hampshire.

Are there any other registration requirements for LLCs and S-Corps in New Hampshire?

Yes, LLCs and S-Corps in New Hampshire are also required to register with the New Hampshire Department of Revenue Administration for tax purposes. Additionally, LLCs and S-Corps may need to register with other state or local agencies depending on the type of business they are conducting.

What is the minimum amount of capital required to form an LLC or S-Corp in New Hampshire?

There is no minimum capital requirement to form an LLC or S-Corp in New Hampshire. However, the amount of capital needed may vary depending on the type of business that is being conducted.

What is the process for dissolving an LLC or S-Corp in New Hampshire?

To dissolve an LLC or S-Corp in New Hampshire, you must file a Certificate of Cancellation with the New Hampshire Secretary of State. This document must include the name of the LLC or S-Corp, the date of dissolution, and the name and address of the entity’s registered agent.

Are there any other requirements for dissolving an LLC or S-Corp in New Hampshire?

Yes, LLCs and S-Corps in New Hampshire must also file the appropriate tax returns for the year in which the entity is dissolved. Additionally, LLCs and S-Corps must notify any creditors or other parties with whom they have contractual obligations.

What are the benefits of forming an LLC in New Hampshire?

LLCs in New Hampshire enjoy the benefits of limited liability protection, flexible management structures, and pass-through taxation.

Are LLCs taxed as corporations in New Hampshire?

In New Hampshire, LLCs are treated as pass-through entities and are not taxed as corporations.

What are the advantages of forming an S-Corp in New Hampshire?

S-Corps in New Hampshire offer the benefits of limited liability protection, pass-through taxation, and potential tax savings.

Are S-Corps taxed in New Hampshire?

Yes, S-Corps in New Hampshire are subject to corporate income tax.

Does New Hampshire allow for multiple members in an LLC?

Yes, New Hampshire allows for LLCs with multiple members.

Are LLCs in New Hampshire required to hold annual meetings?

No, LLCs in New Hampshire are not required to hold annual meetings.

How long does it take to form an LLC in New Hampshire?

Generally, it takes 3-10 days to form an LLC in New Hampshire.

Is a registered agent required in New Hampshire?

Yes, a registered agent is required in New Hampshire for LLCs.

Are S-Corps in New Hampshire required to hold annual meetings?

Yes, S-Corps in New Hampshire are required to hold annual meetings.

How long does it take to form an S-Corp in New Hampshire?

Generally, it takes 4-6 weeks to form an S-Corp in New Hampshire.

Is a registered agent required for an S-Corp in New Hampshire?

Yes, a registered agent is required for an S-Corp in New Hampshire.

What are the filing requirements for an LLC in New Hampshire?

In New Hampshire, LLCs must file an LLC-3 form and pay an annual filing fee.

What are the filing requirements for an S-Corp in New Hampshire?

In New Hampshire, S-Corps must file a Corporation Tax Return, Form SC-1120, and pay an annual filing fee.

Are LLCs in New Hampshire required to have an operating agreement?

No, LLCs in New Hampshire are not required to have an operating agreement.

Are S-Corps in New Hampshire required to have an operating agreement?

Yes, S-Corps in New Hampshire are required to have an operating agreement.

Are there any restrictions on foreign ownership of an LLC in New Hampshire?

No, there are no restrictions on foreign ownership of an LLC in New Hampshire.

Are there any restrictions on foreign ownership of an S-Corp in New Hampshire?

Yes, there are restrictions on foreign ownership of an S-Corp in New Hampshire.

Is it easy to change the ownership structure of an LLC in New Hampshire?

Yes, it is easy to change the ownership structure of an LLC in New Hampshire.

Is it easy to change the ownership structure of an S-Corp in New Hampshire?

No, it is not easy to change the ownership structure of an S-Corp in New Hampshire.

Is it easy to transfer ownership of an LLC in New Hampshire?

Yes, it is easy to transfer ownership of an LLC in New Hampshire.

Is it easy to transfer ownership of an S-Corp in New Hampshire?

No, it is not easy to transfer ownership of an S-Corp in New Hampshire.

What is the minimum capital requirement for an LLC in New Hampshire?

There is no minimum capital requirement for an LLC in New Hampshire.

What is the minimum capital requirement for an S-Corp in New Hampshire?

There is no minimum capital requirement for an S-Corp in New Hampshire.

Are there any annual reporting requirements for LLCs in New Hampshire?

Yes, LLCs in New Hampshire are required to file an Annual Report.

Are there any annual reporting requirements for S-Corps in New Hampshire?

Yes, S-Corps in New Hampshire are required to file an Annual Report.

What are the potential tax advantages of an LLC in New Hampshire?

LLCs in New Hampshire enjoy the benefits of pass-through taxation and potential tax savings.

What are the potential tax advantages of an S-Corp in New Hampshire?

S-Corps in New Hampshire enjoy the benefits of pass-through taxation, potential tax savings, and potential business deductions.

Why New Hampshire LLC Vs S Corp is So Important

One of the main reasons why choosing between an LLC and an S Corp is so important is liability protection. Both legal structures provide limited liability protection, which means that the owners’ personal assets are typically shielded from business debts and lawsuits. However, there are some differences in the level of protection offered by each entity. With an LLC, owners (known as members) are generally not personally liable for the company’s debts or legal obligations. In contrast, in an S Corp, shareholders are also generally protected from personal liability for the company’s debts, but they may still be held liable for their own actions within the business.

Additionally, the tax implications of choosing between an LLC and an S Corp can have a significant impact on your business’s bottom line. LLCs are typically considered pass-through entities for tax purposes, which means that the business’s profits and losses are reported on the owners’ personal tax returns. This can be advantageous for small businesses as it avoids double taxation at both the corporate and individual levels. On the other hand, S Corps are also pass-through entities, but they have additional tax benefits such as the ability to save on self-employment taxes.

Furthermore, the flexibility and management structure offered by each entity can also influence your decision. LLCs are generally more flexible in terms of ownership structure, profit distribution, and management practices. They are often favored by small businesses and startups due to their simplicity and ease of operation. S Corps, on the other hand, have stricter ownership requirements and may require more formalities in terms of holding annual meetings and maintaining company records.

Another crucial aspect to consider when deciding between an LLC and an S Corp is the potential for growth and expansion. While both entities can be suitable for businesses of all sizes, S Corps are often more attractive to investors and lenders due to their established reputation and governance structure. Choosing an S Corp may help your business attract capital and financing opportunities that may not be available to an LLC.

In conclusion, the decision between forming an LLC or an S Corp is not one to be taken lightly. Each entity offers distinct advantages and disadvantages that can impact your business’s operations, finances, and growth prospects. It is essential to carefully consider your goals, needs, and resources before making a final decision on which legal structure is right for your business. By seeking advice from legal and financial professionals, you can make an informed choice that sets your business up for success in the long run.

Conclusion

Even though you can choose a different corporate structure, consider whether it will primarily assist your organization. Striking the perfect balance between corporate benefits and legal protection that suits your particular needs is important. In forming an LLC or S-Corp in New Hampshire, you must be aware that every detail is well-formed so that starting your business will be successful. And, if you would like us to help you form a New Hampshire LLC and S-Corp in New Hampshire, read our other business guides.