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Related Articles

What are the Main Differences between an LLC and an S-Corp?

What Is a C-Corporation?

What Is an LLC?

What Is an S-Corp?

Which Type of Company Incorporation is Right for You?

 

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TopConsumerReviews.com provides unique articles that you won't find anywhere else on the internet. These articles are designed to help you make the most informed decisions possible.

What are the Main Differences between an LLC and an S-Corp?

Perhaps you've already decided to shift out of sole proprietorship or general partnership status. Friends, acquaintances or (bitter?) experience itself might have alerted you to the personal financial risks of sole proprietor or partnership status in business. Advice might come from all directions: From well-meaning friends, acquaintances, other business owners, even relatives...with no business background! The limited liability corporation, or LLC, and the S-corp status may have been suggested to you by one or more interested parties. Thoroughly evaluating the pluses and minuses of the two types of structure is critical to making an intelligent decision.

So what are the main differences between an LLC and an S-Corp?

First of all, both structures are designed to limit personal liability relative to taxes and business debt.

An LLC, or limited liability corporation, is much more like a general partnership or sole proprietorship than a corporation. The owners declare the profits from the business on their own tax returns. No corporate return is required.

An S-Corp is a corporate structure that the Internal Revenue Service assigns a special status. "Subchapter S" status allows a corporation to avoid filing a corporate tax return, reporting instead any profits or losses on the personal return(s) of the owner(s). Otherwise, establishing an S-corporation means jumping through all the administrative hoops that federal, state and local governments require of C-corporations.

An S-Corp must be registered with state, and possibly, local authorities. Filing articles of incorporation and establishing by-laws are necessary steps. Shareholders have to elect a board of directors. Regular meetings must be calendared for both directors and shareholders, and minutes from these meetings must be recorded. In addition, like a C-corporation, an S-corporation must comply with any state or local business licensing requirements. Compliance with all these regulations usually means retaining legal counsel, something an LLC may not need to do to set up shop.

Neither the LLC nor the S-corp structure requires filing a business tax return. Both LLC owner-members and S-corp owners declare business income on their personal returns at tax-filing time.

As a distinction, S-corp owners are also shareholders, and shareholders who work for the company are required to pay themselves a salary that is in line with industry salaries for similar work. The owner pays income tax on that salary, but may or may not owe any taxes on the company's profits. On the other hand, LLC owners pay self-employment tax on 100 percent of the company's net income. Needless to say, this can create a burden.

Also on the downside for the latter structure, LLC means not only limited liability but limited life: If one of the owners dies -- or even goes bankrupt -- the LLC is automatically dissolved. This can be disruptive to business, especially for longstanding clients and employees. An S-corp, as a corporation, quite literally has a life of its own... legally speaking. The vicissitudes of mortality create no obstacle to the operation of an S-corp.

Taking a good, long look at the pros and cons of the S-corp and the LLC is crucial. Seeking legal advice on which structure best suits your circumstances is good practice.

UNGA and Zim's international incorporation

The inauguration of President Emmerson Mnangagwa that came through the birth of the second republic, brought in the dawn of a new era as his main message has been centred on re-engagement and ...

Published:  Thu, 20 Sep 2018 03:55:00 GMT



Simplex Castings Ltd. - Intimation Of Incorporation Of Wholly Owned Subsidiary Company

We wish to inform you that the Company has incorporated an wholly owned subsidiary Company Simplex Castings International Pte. Ltd. at Singapore on 12th September, 2018. The details as required under ...

Published:  Thu, 13 Sep 2018 06:37:00 GMT



New Incorporation St Peter & St Paul Benevolent Society - Valentine Haremski

H. L. Worthington. W. W. P. Ketcham. Escanaba: L. B. Shepard. Ford River; Pier: Carrier. Frankfort: Kate Dar ley. Alpena. THE COURTS. Court of Illinois. Is.iSPecial.)--The proceedings Court today were ...

Published:  Sun, 16 Sep 2018 09:19:00 GMT



IRADIMED CORPORATION (NASDAQ:IRMD) Files An 8-K Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

Item 5.03Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. On September 13, 2018, the Board of Directors (the "Board" ) of Iradimed Corporation (the "Company ...

Published:  Thu, 20 Sep 2018 00:03:00 GMT



The Woodlands Township invites residents to incorporation public forum Sept. 25

THE WOODLANDS, Texas -- The Woodlands Township Board of Directors invites residents to an Incorporation Planning Study Public Forum on Tuesday, September 25, 2018, from 6:30 to 9:30 p.m. at The Woodla...

Published:  Fri, 14 Sep 2018 05:58:00 GMT



DMEA proposes changes to articles of incorporation

Delta-Montrose Electric Association is asking cooperative members to approve a change to its articles of incorporation that would open up more financing options. DMEA is proposing changes to its artic...

Published:  Sat, 08 Sep 2018 23:14:00 GMT



Former Suisun mayor remembers city's last incorporation celebration

SUISUN CITY - It was Crystal School custodian Everett Mackie's eighth-grade son who came up with the winning design. City leaders were casting about for a way to honor the city's 100th anniversary in ...

Published:  Wed, 12 Sep 2018 05:43:00 GMT



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