Forming your rental business as an LLC or a corporation can have many tax advantages. Here are some things you should consider when picking one for your business. It is more important than ever to protect yourself from lawsuits and damages that could stunt the growth of your business. Forming your business as any of the following will protect your personal assets if your company is sued. u00b7 C Corporationu00b7 S Corporationu00b7 Limited Liability CompanyOne thing to note however, there are some rare situations when the liability protection doesnu2019t apply, such as if it can be proved there was negligence on your part. S Corporations are preferable to business owners because they are treated as pass-through entities, meaning the income gets reported through the owners. C Corporations, on the other hand, are subject to a separate corporate tax AND a dividend tax, resulting in u201cdouble-taxationu201d.Another benefit of forming an S-Corporation is that you can elect to treat yourself as an employee of the corporation. This would allow you to pay yourself a salary and treat the rest of the profit as a distribution, paying a lower tax on the amount. The salary has to be u201creasonableu201d which is determined by several factors, such as the average salary in your field. One of the drawbacks of forming an S Corporation is the complicated and significant number of requirements and complicated paperwork.Some of the paperwork required to maintain your S Corporation includes, but is not limited to:u00b7 Form 1120S, U.S. Income Tax Return for an SCorporationu00b7 Form 1120 S (Schedule K-1)u00b7 Form 4625u00b7 Form 2553u00b7 Form 941 and 940u00b7 Form 1040, U.S. Individual Income Tax Returnu00b7 Schedule E (Form 1040), Supplemental Income and Lossu00b7 Schedule SE (Form 1040)u00b7 Form 1040-ES, Estimated Tax for IndividualsThere might also be state requirements for forming an S Corporation. HForming an LLC might be the best option because they are much simpler to form and maintain. The preparation of tax forms each year is also significantly less complicated than for an S Corporation. LLCu2019s prthe same liability protection as S and C Corporations, and like C Corporations are pass-through entities. Basically, forming an LLC has all the same benefits as an S Corporation without the complicated paperwork.You might also consider other things when starting your rental business, such as depreciation methods and figuring out which business start-up costs you can deduct. Business start-up costs includec osts incurred:u00b7 Creating an active trade or businessu00b7 Investigating the creation or acquisition of an active trade or businessSome of the costs of forming a corporation may also be deductible. These costs have to be amortized to be deducted. These are only some of the major concerns when expanding your Airbnb business. If youu2019d like more advice, donu2019t hesitate to check out our Tax Preparation for The Shared Economy