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C-Corporation VS S-Corporation VS LLC

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Category : > Corporation
Posted On : Wed Aug 26th,2009

Comparison of C-Corporation VS S-Corporation VS LLC

Difference between C Corporation, S Corporation and LLC

If you're incorporating your small business, you may have heard that you should form a corporation, s corporation llc or a partnership.

In a C-Corporation, the corporation pays income tax on profits of the corporation. If the corporation pays a dividend to the shareholders, this money is taxed again as income to the shareholders. It may not be as bad as it sounds, though. If you are working for your corporation you should be paid a salary. This salary is deducted from the income of the corporation before taxes, so it will only be taxed once. Depending on the business, salaries may use up most or all the profit. As long as the salary is not unreasonably high, the IRS should not challenge it. Fringe benefits for employees such as health insurance may also be deducted by a C-Corporation, but not by an S-Corporation. For a profitable and growing company it may be better to be a C-Corporation. In a C-Corporation profits beyond salaries and other deductible expenses can be used by the company for growth rather than being distributed to the shareholders and creating taxable income for them.

An S-Corporation does not have the double level of taxation, corporate and person, that a C-Corporation has. Instead, profits and losses are distributed among shareholders who report that income or loss on their own federal income taxes. This is the main advantage to electing S-Corporation status.


The Limited Liability Company or LLC is not a Partnership or a corporation. Limited Liability Company (LLC) is a relatively new business structure allowed by state statute. An LLC is a distinct type of business that offers an alternative to partnerships and corporations, by combining the corporate advantages of limited liability with the partnership advantage of pass-through taxation.




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Comments (3)
Maria Elena Tarrago   wrote on : Sat Jan 16th,2010
Please advise what is the form to fill up to separate people from my LLC Corporation, I included them for emotional matters, now I feel complicated due that I need to include them on my Bank Account., I don't want them to be included there. Thanks.,
Reply :
Dear  Maria Elena Tarrago: Thanks for choosing for your business needs. You have to contact to your bank to remove LLC members name from the Bank. They may ask you to present amended Article of organization, Statement of Organizer or minutes of the meeting where you would decided the dutities and responsibilities of each member of your LLC (Linited Liablity Company).
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Obrian Alberto   wrote on : Wed May 05th,2010
I am a foreigner graduating this May and planning to start a new business. Which business type (LLC, Sole Prop or Corporation) is a better alternative for me. I will also apply for a E-2 Treaty Investor Visa.
Reply :

Creating an LLC is a better option for a non-us-resident. Limited Liability company is a most flexible structure.

Denis   wrote on : Tue Jul 13th,2010
I am buying an online business from someone in another state. I am thinking about registering as sole proprietor and then getting a DB name for my business. However, since the business implies shipping goods to many other states, I read from various sources online it may make more sense to regisiter an LLC or corporation. Can you guide me in this? Thanks in advance. Denis
Reply :
Deear Denis,

Thanks for choosing for your business needs. Yes, incorporating business as an LLC or a corporation is certainly a better idea compare to running business as a sole proprietor. You can either call us at +1 (866)754 4460 or use the following links to decide.

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