- C Corp Advantages And Disadvantages
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- S-corp Advantages And Disadvantages
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…In this video we'll go over my favorite business structure, LLC's.…Let's get started.…A limited liability company is a hybrid business…structure that combines the benefits of corporations and of general partnerships.…LLCs are ideal for a small to a medium size business.…LLCs are regulated state by state in the US, but…most states do not restrict the maximum numbers of owners that an LLC can have.…
By the way,…the owners of an LLC are called members instead of shareholders or partners.…Let's take a look at some of the advantages of limited liability companies.…Compared to a corporation,…an LLC is a simpler business type that is cheaper to maintain.…LLCs, like general partnership have less record keeping,…because they're not required to have formal meetings and keep minutes.…LLCs also offer limited liability.…
Just like a corporation, an LLC is legally responsible for…all the business' debts, losses and liabilities.…An LLC protects the member's personal property.…If the company is sued or…gets in debt, the owners won't lose their personal property.…
C Corp Advantages And Disadvantages
Updated September 26, 2017
ColorBlind Images/Blend Images/Getty Images
Updated September 26, 2017
An S Corporation is one of several optimal structures for a small business. It blends some of the benefits of a sole proprietorship with those of a C Corporation. An S Corporation is often considered alongside a limited liability company when someone is looking for something more formal than a sole proprietorship.
Single Taxation
Like an LLC, an S Corporation has pass-through taxation, which means you only pay taxes once. The profits of the business are distributed to owners, who then pay taxes on their share of the earnings. In contrast, a C Corporation experiences double-taxation. The business pays taxes on corporate earnings and each shareholder pays taxes on his share of the distributed earnings. By working for the business and receiving a salary, an S Corporation owner also may avoid hefty self-employment penalties common with a sole proprietorship.
Simplicity and Asset Protection
An S Corporation is easy to set up relative to other formal business structures. Some people operate as sole proprietors just to avoid formalizing their operation. However, an S Corporation allows for greater credibility with customers, partners and suppliers. Similar to a C Corporation or LLC, an S Corporation also insulates the personal assets of owners, because the business is treated as a separate legal entity from its owners. If the company is sued, for instance, the business assets are at risk, but not the financial assets of owners.
Ownership Restrictions
An S Corporation does have a few more setup and ownership restrictions than an LLC. First, you must be a U.S. citizen or legal resident to form an S Corporation. Also, whereas C Corporations and LLC allow unlimited ownership, an S Corporation is limited to 100 shareholders. Profit distribution or dividends must align with a shareholder's level of ownership. If someone owns 5 percent of the business, he must receive 5 percent of income distributions. LLCs have more distribution flexibility.
Llc Advantages And Disadvantages Pdf Download
Setup Costs
There are more costs to setting up an S Corporation than there are with an LLC. As with C Corporations, you file formal legal documents and pay related fees to set up an S Corporation. Annual report filing fees and franchise fees are additional costs that you may pay with an S Corporation that you don't incur with a partnership or sole proprietorship.
S-corp Advantages And Disadvantages
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