Four Dumbest S Corporation Setup Mistakes

I see and hear about a lot of dumb S corporation setup mistakes.

Some of the mistakes are made by entrepreneurs and investors trying to save money on accountants and attorney fees. And I guess thats okay–albeit penny-wise and pound-foolish.

But you know what really irks me? Some of these mistakesin fact, most of themare made by attorneys and paralegal services Professionals who should know better.

But enough whining. Without further fanfare, here are the four dumbest mistakes that I see people make again and again when it comes to setting up a new S corporation.

Mistake #1: Not Using an LLC

An LLC is almost always the place to start if you want to end up with an S corporation. Why? I like to tell students and clients that LLCs are akin to lite beer. Remember the lite beer commercials? Same great taste but with half the calories?

LLCs work like that. LLCs provide you with all the same great liability protection, but they require only half the red tape.

This might all seem irrelevant, but LLCs can make an election to be treated as an S corporation for income tax purposes. Acccordingly, you want to use an LLC...