Corporation & LLC Differences

Corporations and LLC’s are formed under the jurisdiction of Statutes, and may have issued or un-issued stock (unwise). Issued stock always translates into ownership-proof for shareholders, and should always be backed by some form of value (CPA’s or Financial Advisors are normally required to set up stock funded accounts.).

Typically, Corporations are managed by a board of directors (In Nevada, one person may be all officers of a corporation), which is another way of saying, a board of officers. Officer designations are normally titled Secretary, Treasurer, Vice President and President. To name more officers is to designate them as Directors. Of course, a single Director can control and own a corporation without being a designated named officer. Thus, ownership-position and bottom line authority in a corporation are determined by one's ownership of stock, not one’s title.

LLC’s, or better known as Limited Liability Companies, either have members and/or managers, or both, as opposed to directors and officers of that of a corporation. Usually an LLC may be managed by one or more managers, or by one or more members, or both. Ownership of an LLC is typically so because of issued Membership Certificates (a form of non public stock), which are to be logged, issued, funded and recorded in something called an Operations Agreement. Operation Agreements set the guidelines of how to operate a Limited Liability Companies amongst its manager(s) and/or member(s). Note: All of our kits have generic Operation Agreements.

Forming a Corporation or LLC is the first step for informed people and business proprietors to protect their assets. The benefits of forming a corporate entity are varied and many. Oftentimes the benefits of any corporate entity far outweigh the benefits of a sole proprietorship.

Now Corporations and LLC's provide a unique liability protection, whereas failing to incorporate provides no liability protection whatsoever. In the liability protection afforded by USA incorporating (Corporations and LLC's), creditors can't pursue an officer or member or manager's personal assets for business indebtedness.

Consider, then, that corporate entities have tax favourable savings compared to that of being a proprietorship: self-employment taxes; life insurance; owner-officer health insurance premiums; corporate improvements on personal property for reason of corporate image, and many more.

Unlike the profit of C Corporations, the profit-income of S Corporations and LLC’s are passed-through to the individual and reported on the individual's personal income tax return, instead of being taxed first before the profits are divided.

For the record, there are fewer restrictions on LLC ownership compared to that of S Corporations (One hundred shareholders is the maximum for S Corporations.). Be sure to check with your CPA for proper guidance.

No matter what kind of corporation a person may choose, the corporation will be a structure, separate from the stockholders, because it is considered a “legal person.” In addition, the officers are personally protected from debt collectors and also the irresponsibility’s incurred by the corporation, providing that the law hasn’t been breached by the said corporation.

If an officer-stockholder dies or puts their personally held shares on the market, the corporation continues to survive, unless it is formally put to rest. One advantage of corporations is that they may raise funds by distributing stock to persons who want to invest in that corporation.

In plain words, a C Corporation is a regular or normal corporation. Comparably, an S Corporation has the same qualities but different advantages. One of these is that the profits, instead of being taxed, go directly to a person’s personal income. In other words, an S Corporation offers single taxation while avoiding the double taxation of C Corporations.

Double taxation for C Corporations means that C Corporations pay taxes at the corporate level, and then again on dividends, bonuses or salaries. S Corporations on the other hand, file a unique election with the IRS to obtain S status, which means, again, that the profits, instead of being taxed twice, pass-through to a person’s personal income. If an S Corporation is sold, the taxable profits are usually less than that of C Corporations.

To Begin Creating Your Corporation Or LLC Email The Following Information:

1.) Your Proposed Entity Name.

2.) Type Of Business.

3.) List The First Board of Directors, Naming The President, Secretary And Treasurer (LLC: Members or Managers).

4.) The state of your filing.

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Note: If you don't use your credit card, money orders are faster for filing the entire incorporation process. So, to expedite a Corporation or LLC formation, send a money order or a cashiers check.

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