Entity Structure (LLC, S-Corp, None, etc.)

searcher profile

December 26, 2025

by a searcher from Northwestern University - Kellogg School of Management in Brooklyn, NY, USA

Hello, I am planning on setting up an entity for my search. I would love to get people spots on the proper entity and the benefits of selling it up one way versus another (ie LLC vs S-Corp). My goal is to be able to run expenses through it during my search, to use it to acquire my business, and then to be able to deduct the expenses from searching as costs after I acquire the business for tax purposes. I’d love thoughts on the best way to do this and any tricks/tips. Also if I’m missing anything on ways to optimize cost reduction through this. Lastly if you’re familiar with SBA Loans is there any issue using the entity to acquire the business instead of personally acquiring it as an individual.
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commentor profile
Reply by a professional
from New York University in New York, NY, USA
It depends, but if anyone suggests a S Corp they should be launched out of a canon into the ocean. From my podcast: - Entity selection: https://frblaw.com/podcast/entity-selection/ - Why you should buy a professional sports team (tongue in cheek, but the concept works for any business): https://frblaw.com/podcast/why-for-tax-reasons-you-should-buy-a-professional-sports-team/
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Reply by an investor
from McGill University in San Diego, CA, USA
Most searchers set up an LLC for the search and then form a new acquisition entity at LOI or close. In practice, only a limited set of costs are typically capitalized into a deal that actually closes: 1. Legal and accounting fees directly tied to the acquisition 2. Deal-specific diligence costs 3. Formation costs for the acquisition entity Most search costs are not immediately deductible. They are generally treated as startup costs rather than operating expenses, and startup costs are typically capitalized (and in some cases amortized) once the business begins operations. Definitely worth confirming all of the specifics with your lawyer and CPA.
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