Starting a Business

Advantages of an LLC snapshot

• Limited liability protection. Owners are not held personally responsible for business debts and liabilities.
• Pass-through taxation. Typically LLCs do not pay taxes at the business level. Income/loss is reported on the owner’s personal tax returns and any tax due is paid at the individual level.
• No ownership restrictions. LLCs do not face restrictions on the number of owners.
• Flexible management. Owners have flexibility in structuring the management of the company.
• Few ongoing formalities. LLCs have less annual filings. They do not have meeting requirements like C corporations or S corporations do.

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Advantages of a C corp snapshot

• Limited liability protection. Owners are not typically responsible for business debts and liabilities.
• Unlimited number of owners. C corporations can have an unlimited number of shareholders.
• Unlimited life. A corporation does not cease to exist when a corporation’s owner dies.
• Easy transfer of ownership. Ownership of a C corporation is easily transferable through the sale of stock.
• Easier to raise capital. Additional capital can be raised by selling shares of stock.

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Advantages of an S corporation snapshot

• Limited liability protection. Owners are not typically responsible for business debts and liabilities.
• Pass-through taxation. No tax is paid at the business level on the corporation’s profits. Income and loss is reported on the owner’s personal tax returns and any tax due is paid at the individual level.
• Unlimited life. A corporation does not cease to exist when a corporation’s owner dies.
• Easy transfer of ownership. Ownership of a C corporation is easily transferable through the sale of stock.
• Easier to raise capital. Additional capital can be raised by selling shares of stock.

*All corporations are initially set up as C corporations. But, sometimes it is advisable to consider having your company request S-Corp status from the IRS (this requires a special form submitted by the client). Clients can ascertain whether to request S-Corp status after consulting with a tax professional or CPA.