The problem with just filing an LLC
LegalZoom will file a single-member LLC for $99. It is genuinely a good deal — for the paperwork. What you do not get is anyone thinking through whether an LLC is actually the right entity for what you are building, whether Delaware is smarter than your home state, whether you should be electing S-Corp treatment, whether a multi-entity structure will save you meaningful tax later, or whether the operating agreement they provide (there is not one) will hold up when your business partner sues you.
Northbridge business formation is the strategic layer that sits on top of the filing. We file the paperwork too — but the filing is the small part. The structural thinking is the value.
Entity structures we help clients choose
- Single-member LLC — the default for solo owner-operators. Simple, flexible, pass-through taxation. Usually right for professional services, consulting, and sole-founder businesses.
- Multi-member LLC — the default when there are two or more owners. Requires a properly drafted operating agreement (see our operating agreements service).
- LLC with S-Corp election — for owner-operators earning above roughly $60K in net income where self-employment tax savings on the salary/distribution split becomes material.
- C-Corporation — for businesses planning to raise venture capital, issue employee stock options through a formal option plan, or take advantage of QSBS (Qualified Small Business Stock) treatment.
- Limited Partnership or LLLP — investment vehicles, real estate holding structures, family limited partnerships.
- Series LLC — where state law allows (Texas, Delaware, Nevada, others) — for holding multiple properties or business lines under one legal entity with internal separation.
Multi-entity structures for operating and holding
Once a business exceeds a certain complexity, a single-entity structure stops serving the owner. Common patterns we design:
- Holding company + operating subsidiary — the operating business runs at the sub level while assets (real estate, IP, valuable equipment) sit protected at the holding level. Common for owner-operators with $500K+ in valuable business assets.
- Real estate LLC separated from operating LLC — the business rents its space from a related LLC the owner also controls. Separates real estate risk from operational risk and creates a rent-based cash flow the owner controls.
- IP holding entity — trademarks, patents, and licensable IP owned by a separate entity that licenses to the operator. Preserves IP value in an asset sale.
- Multiple operating entities under a shared holding company — for owners running multiple related businesses that would benefit from shared services, consolidated banking, and tax coordination.
State of formation strategy
Delaware, Nevada, Wyoming, and Texas each offer different advantages for entity formation. The right choice depends on: where you will actually operate, whether you plan to raise capital, whether you want to raise privacy of ownership records, whether franchise tax structures matter, and whether you will need to qualify to do business in multiple states anyway.
Common mistake: Delaware formation for a business that will only ever operate in one other state — usually costs more than it saves. We will tell you when Delaware helps and when it does not.
S-Corp elections and when they help
Making an S-Corp election on an LLC changes how the owner is taxed on business profits. Instead of paying self-employment tax on all net income, the owner pays themselves a "reasonable salary" (subject to payroll taxes) and takes remaining profit as distributions (not subject to self-employment tax).
The tax savings become material when net income runs above roughly $60K-$80K annually and the business has stable profitability. Below that, the added compliance cost (payroll processing, separate tax return) usually eats the savings. We will model the specific breakeven for your situation.