What are the Pros and Cons of
LLCs Vs. Corporations?
While we are not attorneys, we have done some
extensive research in the areas you are interested in and we may have some ideas that will
help you accomplish your goals. Since I do not know your personal goals regarding your
current form of business or the exact purpose (asset protection, liability protection,
estate planning, tax minimization) for your company, it is difficult for us to give you an
opinion, but we'll try.
Some of the basics are that :LLC's and Corporations are created by the state
they are formed in with the following features. They are born of legal age, can create and
enter into contracts, the owners are usually protected personally from assaults on their
assets. Both can be used to gather investor capital and both can limit your personal
liability.
The differences mainly involve how management has a say in the operation of the
business, and in many instances, how the IRS handles the income tax positions.
Corporations have four basic characteristics. Namely, Limited Liability for the
stockholders, unlimited life, centralized management, and free transferability of shares.
LLC's typically will be taxed as a corporation (company profits taxed, and then owners
taxed on any distributions of income), if more than two of the above characteristics exist
for that form of business ownership. If less than three characteristics exist in an LLC,
the LLC is normally taxed as a partnership, without the unlimited liability of a
partnership. An S type IRS classification on a corporation is also taxed as a partnership,
but still with limited liability of the owners. We see several advantages to the LLC
compared to the S classification of a corporation being that S corporations owners must
be actual people that are American citizens. If these rules are not followed for the S
corporation, it will be taxed doubly like a C Corporation. The LLC, we believe, on the
other hand, can be held by foreigners, trusts, other LLC's, Corporations, or any other
legal entity, yet still taxed as a partnership.
Many times, depending on your personal goals, one or more of each of these
entities can be used together. Some of the deductions in the form of employee benefits are
not allowed with an LLC and you should seek legal or accounting advice on these areas. On
the other hand, the LLC, if it follows the less than three characteristics I named above,
will be taxed only once as a partnership.
Since we are not lawyers, what we are telling you, is simply an opinion and we
have to preface everything we say with "We don't know, but We have heard".
Disclaimer
All data contained on this web site is provided for
education and guidance. It is not intended to address the exact situation of any specific
individual or entity. Reliance on this data is exclusively at the user's own risk. The
data is not intended to provide a comprehensive treatment of any particular subject.
Accordingly, the data in this web site is not intended to constitute legal, investment,
accounting, tax, or any type of professional advice. If legal advice or other expert
assistance is required, the services of a competent professional person should be sought.
Every attempt has been made to ensure that the data
contained in this web site is accurate at the time of compilation. However, neither Legal Forms - Pahrump nor any personnel nor staff member
nor affiliation associated therewith is responsible for any errors or omissions, or for
the results obtained from the use of this data. Inadvertent errors can occur, and
applicable laws, rules, and regulations are subject to interpretation and often change.
This web site contains links to other sites over
whom neither Legal Forms - Pahrump nor any
personnel nor staff member nor affiliation associated therewith has any control. Neither Legal Forms - Pahrump nor any personnel nor staff member
nor affiliation associated therewith, provides any warranty about the accuracy of data
found on any of these servers.
Except where otherwise noted, the web site contents
are � 1999 by Legal Forms - Pahrump No
part of this web site may be reproduced or transmitted in any form without written
permission.
Contact Information
Presently, Legal Forms - Pahrump only
sells products and services within the United States. If you are in the United States, you
can reach us with the following information.
LEGAL FORMS - PAHRUMP
