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LLC vs. Corp

Asked by: Karl - 29 October, 2012
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/default.png-f1597c1da25f30f8c1a941405e8391c8 Me and my wife want to start an internet traiding company. What are the benefits of LLC vs C/S-corp etc?
Answered by: Ray Albert - 2 November, 2012
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/194.jpg-630c771619e92bede7e6f696b56767b9 Karl,

LLC is a flexible entity that can elect to be treated either as (in your case) partnership, S-Corporation or C-Corporation. Corporations have the choice to elect to be treated as S-Corporation or C-Corporation. By default LLC is treated as partnership/disregarded entity, and corporation is treated as C-Corporation.

Entities treated as S-Corporations, partnerships or disregarded entities are pass-through, meaning that company income is not taxed on the company level, and instead is passed through to the owners' personal tax return, but with some specific differences.

Other than taxation, Corporation differs from LLC in that it has to keep up with all the formalities, such as maintaining corporate structure, mandatory meetings of shareholders and board of directors, drafting the company bylaws, etc., while an LLC is much more flexible and easier to maintain (please click here to see our chart comparison on some of the structure differences between C-Corp vs. S-Corp vs. LLC).

For more specific details on how those entities differ from one another, and which is better in your case it would be best to discuss your case with a CPA.

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