LLC VS C-CORP

LLC vs. C-Corporation

What Is Limited Liability?

A form of insurance for your personal assets is limited liability. It means that your personal responsibility for the business' debts and commitments is no more than the amount of money you invested in the business. This prevents your house, vehicles, and other personal properties from being used to pay off any debts your company has accumulated.

What Is a C-Corporation?

Any corporation that is taxed separately from its members is referred to as a C Corporation. Unlike S Corporations, C Corporations are taxed twice: once on profits and then on the owners' wages.

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Bussiness Structure

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Difference Between LLC & Corporations

Limited Liability Company Liability

Combines limited liability protection with a pass-through tax structure.

Taxatio n IRS rules allow LLCs to choose between being taxed as partnership or corporation.

Maintenanc e The easiest entity to maintain with the least amount of formal annual requirements.

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C-Corporation Liability

Owners / shareholders have limited personal liability for business related debts.

Taxation Separate taxable entity, corporate profits among owners and corporation.

Maintenance Meetings are required to maintain corporate status. Stock may be sold to raise capital.

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LLC vs. Corporation: Taxes LLC Taxes In default, an LLC is taxed as a pass-through entity. It means that the company's profits are "passed through to the owners (called members). Profits and losses are reported on the owners' individual tax returns, and not at the level of the corporation. As a consequence, for owners of an LLC, filing taxes is also easier. Any losses or company operating expenses can be excluded from personal tax returns, which may help offset other revenues.

Corporation Taxes As a separate legal entity which can receive its own revenue, companies are taxed. It is the duty of companies to pay tax on their income (corporate tax) and tax on dividends paid by the company to its shareholders. As dividends (like wages and bonuses) are not tax deductible, dividends are taxed twice. This is regarded as double taxation. For smaller companies, this is not a concern where only the shareholders work for the company.

Wrapping Up With each company providing its own advantages, all corporations and limited liability companies distinguish the shareholders from the business and have limited liability security for their properties.

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