LLC Vs. Corporation Vs. S Corporation

There are many different vehicles through which to register one's business and in economic times such as these it is very important that people are aware of the benefits of both. It is therefore a good idea to understand the differences between LLC vs. corporation.

The acronym LLC stands for Limited Liability Company which represents a combination of partnership and corporation structures. The very important thing to note is the manner in which a company such as this is formed, means that it is neither a corporation or a partnership. The point of this kind of organization is to try to combine the best of both worlds and be implemented when you decide how to write a plan business plan.

This type of company set up has a number of advantages to it. The first of these is that there is literally limited liability which means that LLC owners will enjoy the protection of a corporation structure. So they will not be directly burdened with debt of the organization. Secondly, there is also a greater degree of flexibility when it comes to how the profits are distributed. You also don't have to take minutes of every single meeting that is held and even if you do, these don't have to be made public. Perhaps the best advantage is that there is a principle called flow through taxation which means that it is possible to avoid having to pay both corporate and individual tax.

The S corporation is called this due to its registration as a company under Subchapter 5 of the United States Internal Revenue Code. The main advantage here is that the company itself does not pay income taxes.

But the individuals of the company get direct access to the company's profits and losses, so they are the ones that will pay the tax.

At the end of the day it can be a difficult choice to decide between the LLC vs. Corporation company type. You need to make sure that you weigh up your options carefully.