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I am working to start a publishing company with a partner. I am researching the best LLC type for tax purposes to create - a regular LLC or an LLC taxed as an S-corp. From what I have researched, a regular LLC taxes the members as self-employed and an LLC taxed as an S-corp allows members to have up to 50% of the income being passed through the LLC to be distributed as a dividend but you are taxed as an employee. What I want to know is what's the best structure to use if we are going to be hiring freelancers? Or does it even matter? Our business will be hiring a lot of freelancers. Also, can we start out as a regular LLC and change how its taxed later on? Thank you in advance for your responses.

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    LLC is for liability purposes, not tax purposes. You should talk to an attorney on the liability question and a licensed tax adviser on the tax question.
    – littleadv
    Feb 2 at 18:17

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I am researching the best LLC type for tax purposes to create

LLCs serve no purpose for tax, they're either disregarded entities or taxed as S-Corp. Creating LLC for tax purposes is a meaningless statement.

From what I have researched, a regular LLC taxes the members as self-employed and an LLC taxed as an S-corp allows members to have up to 50% of the income being passed through the LLC to be distributed as a dividend but you are taxed as an employee.

No, there's no such rule. What you can do with S-Corp (and it doesn't matter if it's an LLC or not) is to avoid reporting income not earned by your own personal efforts as "earned income" and save on the SE component of your taxes. But it is not taxed as dividends, S-Corps have no dividends.

Also, can we start out as a regular LLC and change how its taxed later on?

Yes, you can elect to be taxed as a Corporation later (and then elect the S-Corp treatment). From tax perspective it's the same as moving your business into a new entity, including issuing a new EIN and restarting all the books.

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