C-Corporation

Question:

Q: When Do I Know It’s Time To Incorporate?

Answer:

A: If you are starting a business or you’ve been in business for a while then the time to form a company is now. It doesn’t have to be a C-Corporation but it should be some type of entity that will provide liability protection. Running your business as a Sole Proprietorship is risky. As a sole proprietor you are taking on the full burden of debt, liability risk and litigation. Our expert staff is here to help. Please give us a call at 1-800-648-0966 and allow us a few minutes of your time to discuss your business plans. We can assist you in outlining some options in choosing the right entity.

Entity Comparison Chart

The following table provides a look at the LLC vs Corporation, and LLC vs S-Corporation. Tax comparisons can be found in the lower portion of the table.


C-CORPORATION

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LLC

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S-CORPORATION

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Type of
Organization

Stock, there may be different classes.

Membership interests. There may be different classes of membership. One class of stock. Which may be voting or non-voting.
Eligible Owners No restrictions. No restrictions. 100 shareholder limit. No non-individual and no non-resident alien shareholders.
Management Managed by director(s) and officer(s). Two Management Types
- Managed by Manager
- Managed by Members
Managed by director(s) and officer(s).
Allocations of Ownership None. Dividends must be paid based upon stock ownership. Permitted if the allocations have substantial economic effect. None. Income, gain, and loss pass-through to the shareholders based on the percentage of shares owned.
Liability Protection There is limited liability for shareholders, officers and directors. There is limited liability for members and managers (if applicable) There is limited liability for shareholders, officers and directors.
Duration Perpetual Dissolves at the time specified in the Operating Agreement or upon the loss of a member unless other members agree to continue. Perpetual
Transfer of Ownership Shares freely transferred. There may be restrictions under certain state laws. Shares can be transferred only to eligible S-corporation shareholders

All that we do is submitted and performed with the understanding that we are not engaged in rendering legal, accounting or other such professional service. If legal advice or other expert assistance is required, the services of a professional should be sought.

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