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LLC vs. Corporation

Limited Liability Company (LLC)

Corporation (Inc)

Shields personal assets from business liability

Shields personal assets from business liability

Requires separation of business and personal finances

Requires separation of business and personal finances

Allowable in all 50 states and the District of Columbia

Allowable in all 50 states and the District of Columbia

Highly flexible management structure

Highly flexible management structure

Flexible tax reporting options

Flexible tax reporting options

Preferred by outside investors

Preferred by outside investors

Preferred for IPO

Preferred for IPO

Recognized outside of the United States

Recognized outside of the United States



What is an S corporation?

After you create a corporation or LLC, you also have the opportunity to decide how you'd like your business to be taxed.

Single owner LLCs can be taxed either as a sole proprietorship or a corporation. LLCs with more than one owner can be taxed either as a partnership or a corporation. Income from LLCs treated as sole proprietorships or partnerships is reported directly on the owner’s individual tax returns.

New corporations, as well as LLCs considering corporate taxation can choose between filing taxes as a C corporation ("C corp") or an S corporation ("S corp"). An S corp is considered a "pass-through entity," which means the business itself isn't taxed. Instead, income is reported on the owners' personal tax returns. Businesses taxed as C corporations are not pass through entities. Income is taxed at the corporate level, and, if dividends are distributed, at the individual level as well.

We can help you understand your options so you choose what's best for your business. Talk to one of our network of attorneys today.


C-corp or S-corp

C Designation

S Designation

Owners pay personal income tax on profits

Owners pay personal income tax on profits

Business must pay corporate income tax

Business must pay corporate income tax

All business income/loss is passed through to owners each year.

All business income/loss is passed through to owners each year.

No more than 100 shareholders

No more than 100 shareholders

Shareholders must be U.S. citizens or resident aliens

Shareholders must be U.S. citizens or resident aliens




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