Compare Entity Types

LLCs vs. Corporations

Limited Liability Company (LLC)

 Requires Business Tax Returns to be Filed Separate from Owners’

 Protects your Family’s Assets from Lawsuit and Debt Liability

 Profits Will “Pass Through” to Owners’ Personal Taxes

 Flexible Management Structure

 Recognized Abroad

 IPO Stock Options

 Accepts Investors

Corporation (Inc)

 Requires Business Tax Returns to be Filed Separate from Owners’

 Protects your Family’s Assets from Lawsuit and Debt Liability

 Profits Will “Pass Through” to Owners’ Personal Taxes

 Flexible Management Structure

 Recognized Abroad

 IPO Stock Options

 Accepts Investors

If starting a Corporation seems better aligned with your goals than an LLC, consider the different types of Corporations below:

Which type of Corporation is right for you?

Once you’ve decided on opening a Corporation, you must select either a “C” designation or an “S” designation. Use the comparison chart below to decide which is the most appropriate type of Corporation for your needs.

S-Corporations vs. C-Corporations

S-Corporation

 Owners Pay Taxes on Profits in their Personal Income Tax Returns

 All Profits/Losses “Pass Through” to Owners’ Personal Taxes

 Shareholders must be US Citizens or Resident Aliens

 Subject to Corporate Income Tax

 100 Shareholder Maximum

C-Corporation

 Owners Pay Taxes on Profits in their Personal Income Tax Returns

 All Profits/Losses “Pass Through” to Owners’ Personal Taxes

 Shareholders must be US Citizens or Resident Aliens

 Subject to Corporate Income Tax

 100 Shareholder Maximum

Once you’ve chosen a business type, you can then determine how it will be taxed

You can designate how your business will be taxed

Once a Corporation or LLC is formed, you have 75 days to notify the IRS how you’d like your business to be taxed. Get familiar with your options by reviewing the chart below

Single Owner LLC

Has the ability to be taxed as a:

Sole Proprietorship

Corporation

Multiple Owner LLC

Has the ability to be taxed as a:

Partnership

Corporation

S-Corporation

Has the ability to be taxed as a:

C-Corporation

S-Corporation

C-Corporation

Must pay corporate taxes, in addition:

Income Taxed at Corporate Level

Also at Personal Level – If Dividends Paid