Companies that do business with local municipal governments might assume that these entities would want to support operations in their cities or states. While certainly this can happen, there may be a variety of factors that go into a city council's decision to award a contract to a vendor from outside the area. In one recent situation involving this type of decision, the local company is pushing to have the contract award reviewed and reconsidered.
A sub S corporation, or subchapter S corporation, is a special type of corporation that provides the security of LLCs but allows profits and losses to flow directly through to shareholders. This means that income and losses accrued by the corporation may pass through to the shareholders so that they may include them on their individual tax returns. This eliminates the need for the company to pay federal taxes. Though this type of business entity is more appealing to small business owners than a standard corporation, you should weigh the pros and cons of this type of entity before structuring your Illinois- or Michigan-based business around it.