Which One???
LLC (limited liability company)
LLC's are not a corporation, but offers many of the same advantages. A lot of small business owners and entrepreneurs like LLC's because they use the "pass through"" taxation of a sole proprietorship or partnership, and have limited liability protection of a corporation. LLC's have additional advantages over corporations:
LLC's allow better flexibility in the organization and management or your business.
Foreign investors prefer LLC's because LLC's do not have the ownership restrictions of S Corporations.S Corp
A Subchapter S Corporation is a general corporation that has elected a special tax status with the IRS once the corporation has been formed. S corporations are best for small business owners who prefer to be taxed as if they were still sole proprietors or partners. When a general corporation makes a profit, it pays a federal corporate income tax on the profit. Also, if the business declares a dividend, the stockholders must report the dividend as personal income and they end up paying more taxes. S Corporations get around this "double taxation" (once at the corporate level and again at the personal level) because all income or loss is reported only once on the personal tax returns of the stockholders. For a lot of small businesses, the S Corporation offers them the best of both worlds, by combining the tax advantages of a sole proprietorship or partnership with the limited liability and enduring life of a corporate structure.
For a S Corporation status, your corporation must have these guidelines.
1. Stockholders (all of them) must be citizens or permanent residents of the United States.
2. 75 is the maximum amount of stockholders an S corporation may have.
3. If an S Corporation is held by an "electing small business trust," then all beneficiaries of the trust must be individuals, estates or charitable organizations. Interests in the trust cannot be purchased.
4. One class of stock may only be issued or a S corporation.
5. Only or up to 25% of the gross corporate income may be derived from passive income.
6. Some general business corporations are not able to receive S Corporation Status.
Exceptions:
A bank that is a financial institution
Insurance companies that are taxed under Subchapter L
D.I.S.C. (Domestic International Sales Corporation
Different affiliated groups of corporationsFor more information about these and other aspects regarding S Corporation status, contact your local IRS office or legal attorney.
C Corp
The most common Corporation is known as a "C" corporation or General corporation. A general corporation may have an unlimited number of stockholders. it is usually picked by those companies planning to have 30+ stockholders or large public stock offerings. Because a corporation is a separate legal entity, a stockholder's personal liability is usually limited to the amount of investment in the corporation and no more.
EIN stands for Employer Identification Number, now when you create a corporation you create a new entity. You give birth to your own person. The EIN is like your persons Social Security Number. With this number you can do anything a person can do e.g. like open a bank account, create a new line of credit. EVERYTHING that requires a social security number, your EIN number will work for in place. And the best part about it is assuming you are an LLC, your corporation assumes all the risks. NOT YOU! its called the corporate veil. incentives to have less risk to get out there and keep this economy moving. We will provide you with EIN acquisition instruction immediately upon sign up.
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