Limited Liability Company
An LLC combines the personal liability protections of a corporation with the tax flexibility of a partnership. The LLC offers many advantages, including:
- Pass-through taxation
- No residency requirement
- Enhanced credibility
- Legal protection
- Less paperwork than a corporation
The C corporation is the most common type of corporation in the U.S. and has a number of advantages:
- Owners’ personal assets are separate from the company’s liabilities
- Unlimited growth potential through the sale of common stock
- Certain tax advantages, including reduced likelihood of an IRS audit, when compared to a sole proprietorship
By meeting certain requirements when incorporating a small business or start up, you can elect to claim a S corporation status with the IRS. An S corporation status allows your company to “pass through” its taxable income or losses to the business owners and investors, eliminating “double taxation” on shareholder dividends and corporate income.
S corporation status also offers limited liability, investment opportunities, continuous existence and a once-a-year tax-filing requirement.