Can an S Corp own shares of an LLC?

I live in NC and own a new startup that is organized as an S Corp. I have a friend that also has a business (not sure of the type of structure at the moment), and we've been contemplating working together in a slightly different capacity than both of our businesses.

My questions is, if we form an LLC for the new venture, can my current S Corp own my portion of the shares of the new entity?

I guess while i'm posing that question, would it be best to just own the shares as an individual instead? and just work both companies separatley?


Thanks,

Sean

xsys2001i said:

My questions is, if we form an LLC for the new venture, can my current S Corp own my portion of the shares of the new entity?

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Yes.

I guess while i'm posing that question, would it be best to just own the shares as an individual instead? and just work both companies separatley?

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How to do depends on a lot of different factors.

Steve - thanks for the reply. What would be some 'factors' that would that would make it better for me as an individual to own the shares vs. my S Corp?


Thanks!

Sean

That's what books and expert advice are for. It is not the role of the forum to do law review articles or long if/then trees.

One example might have to do with the profitability of each. If the LLC is profitable, it will increase the income of the S-corp. The higher the income of the S-corp, the higher the reasonable salary of the owner.

(Thus increasing the tax load of the owner for FICA and MCARE matching amounts.)

While I don't think anything stops you from having a corporation as a member of the S-Corp, you're going to lose the ability to treat the LLC as a S-Corp (for income pass through) if you do that.

FlyingRon said:

While I don't think anything stops you from having a corporation as a member of the S-Corp, you're going to lose the ability to treat the LLC as a S-Corp (for income pass through) if you do that.

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OP mentioned having the S-corp own the LLC, not vice versa.....

davew128 said:

OP mentioned having the S-corp own the LLC, not vice versa.....

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That first S-corp should read LLC.