C Corp or LLC?

Asked by: Robert Adamo  — 25 October, 2012

I am opening a new business in Texas and trying to decide between a C Corp.. and LLC…it will be a sign related business with est. revenues of 700K and profit of 80K-250K…which do you recommend?

Answered by: admin  — 25 October, 2012

An LLC is a pass through entity, which means the profits of the company are not taxed, and are passed through to the owners’ personal income, where you would then pay personal state and federal income taxes. A C-Corporation will first pay corporate income tax on it’s profits, and then the owners would pay themselves a dividend, where you would of course pay personal state and federal income taxes.

For a side by side comparison of the main differences between the two entity types, please read our research article titled ‘LLC vs Corporation‘.

It’s not a bad idea for you to consult a CPA, since each case is unique and you want to involve the person who would do bookkeeping and tax preparation in the discussion on what type of entity this business would be. Just keep in mind, LLC is a flexible entity and you can choose how it will be taxed (as partnership, S-Corp, or C-Corp).

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