Q: For the state of colorado - I am going to need to open an S Corp. Is it better to start it as LLC or C Corp for few day?

A: Many people form an S-Corp to take advantage of the personal income tax breaks when paying yourself as both an owner and an employee of the business. The S-Corp election is more accurately called the "subchapter S tax election" and, as you point out, can be used in combination with an LLC or a traditional C-corp.

I'm not familiar with your situation and this answer is not legal advice specific to your goals, but generally the subchapter S election is used with LLCs where a small number of owners of the business wish to draw regular wages and make partners' draws.

If you make the subchapter S election, the underlying business will still be an LLC or a corporation (whichever you selected when forming the business). The tax election just establishes the rules for taxation and how you can convert business profits to personal income.

When selecting between an LLC and a Corp structure, one key factor is the future ownership of the business. If the business will have relatively few owners and infrequent changes in ownership, an LLC make a lot of sense. If the business will have shareholders in the traditional sense, will change hands often, or will seek investors that pan to hold shares, then a corporate structure is most appropriate. Keep in mind that a corporation can "authorize" shares but "issue" them to individuals at a later time. In contrast, an LLC generally has ownership that adds up to 100% at all times, and an LLC generally cannot own it's very own equity (but a corporation can).

The liability protections of an LLC and a corporation are often similar, but the duties and obligations to maintain those protections will vary. Generally, a LLC has simplified duties of self-governance to maintain the so-called "corporate veil" of protection. Corporations usually have more complex requirements to maintain the liability protections, such as formal meeting of a board of directors and keeping written meeting minuities.

One last consideration is the overall ownership structure if the business will be in a family of companies with parent companies and subsidiaries. There are restrictions on how a business acting under the subchapter S election can be a part of a holding structure. Talk to your CPA to be sure your overall structure is acceptable for your business making the subchapter S election.