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LLC v. S Corp?
What is
the difference between an LLC and a corporation?
What is an "S" Corporation?
What about other corporate
forms?
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What is the
difference between an LLC and a corporation?
Both limited liability companies (LLCs) and
corporations have limited liability, but their structure, advantages and
taxation can vary. Generally, a corporation has a more rigid structure
than an LLC, and formalities are stricter in a corporation than in an
LLC. Also, taxation on an LLC “passes through” to the owners, unlike a
corporation, which is generally taxed separately.
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What is an S Corp?
An “S” corporation is a corporation that is not
taxed directly as a corporate entity. Instead, the taxes are “passed
through” to the owners. Thus, taxation for owners of an S corporation
is much like an LLC or an individual income tax. In comparison, a
general or “C” corporation is taxed as an entity separate from its
shareholders. “Double taxation” occurs when the corporation is taxed,
and then its employees and shareholders are taxed individually.
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What
about other corporate forms?
Other corporate forms exist and are suitable for
particular businesses, such as certain professions. However, LLCs
and corporations are the most common forms of organization.
Careful attention should be paid to choosing the right entity for your
particular business needs, meaning another form of organization may be
most appropriate.
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