Initiate A Start-Up
Learn how forming an LLC, and different corporations can postively impact your liability and taxation as a business owner.
Limited Liability Company
For numerous reasons, the Limited Liability Company (LLC) is presently believed amongst the leading business structures within smaller companies. It is mostly not very pricey to form an LLC and is easier to manage compared with other corporations.
C Corps and S Corps usually offer LLC to the individuals owning a business. Similarly, LLC also tends to offer limited liability protection to its owners. So, if a business own any liability, it is strictly limited to that particular business only. It has nothing to do with any other operating business in the market, nor it causes any influence on the personal assets of any other business.
Also, LLC is not accountable to federal income tax. LLC is qualified for 'pass-through' taxation, which infers that the company's income taxes are reflected on each owner's tax return, not at the scale of the business scale
S-Corporation
It is a dream come true to witness your start-ups grow into mature businesses gradually. But with the growth of your company, the rate of tax also tends to upsurge.
Rapidly establishing firms face a lot of hurdles in the tax seasons. It is particularly the high time when they are required to initiate S Corporation. As for businesses operating on a small scale, this corporation becomes very convenient for them in the tax season.
C-Corporation
A C Corporation is also renowned as a business entity established and organized on a national level. It is one of the numerous ways to legally differentiate the official and regulatory reason and the tax business. This corporation is a unique method to build ownership of a business and contrasts with other popular business structures together with Limited Liability Companies (LLCs), S Corporations, Sole Proprietorships, and others.
The A C Corporation may like to circulate some of the company's profits as bonuses, which are circulated to shareholders. The business liabilities are separate from the directors, investors, and shareholders because a C Corp is a distinct legal entity.
Non-Profit Corporation
The sole aim of the Non-profit Corporation is quite different from generating profit only. It functions differently from the LLC, S-Corp and C-Corp. This corporation is strictly aimed to benefit the employed individuals by distributing the profit among them. Not a single penny is distributed among the shareholders.
As mentioned earlier, the Non-Profit Corporation is mainly utilized to pay the monthly wages of the employees working in the corporation.
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01 Why Form a Limited Liability Company?
The formation of a LLC is cheaper and easier because its formed by smaller companies. All Limited Liability Companies are not liable for any business loss.
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02 What are the Benefits of an S-Corporation?
• S corporations do not have to pay corporate Tax.
• S corporations protect the personal assets of its shareholders.
• S corporation does not pay federal taxes at the corporate level.
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03 Can shareholders of C-corporations transfer their shares?
Yes, a shareholder can freely sell his shares and the buyer will become the owner with both management and economic rights.
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04 What is the purpose of a Non-Profit Corporation?
A Non-Profit Corporation unlike S-corporations, C-corporations and LLCs are not made for profit making. They exist to pay salaries to their employees and help their beneficiaries.
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