Nevada Incorporation & Resident Agent
Frequently Asked Questions About Corporation Entities
about different entities
"LLC" and "Corporation" have
many of the same characteristics. The most important characteristic they
share is that they both offer limited liability protection to its owners.
Typically, shareholders are not liable for the debts and obligations of
the corporation; thus, creditors will not come knocking at the door of
a shareholder to pay debts of the corporation. In a partnership or sole
proprietorship the owner's personal assets may be used to pay debts of
the business. With an LLC, the members are not personally liable for the
debts and obligations of the corporation.
What is the difference between a "C" and an "S" corporation?
All corporations start life as "C" corporations. As a benefit to small businesses, which meet certain criteria, the Internal Revenue Service allows them to apply (via form 2553) for "S" status. This means that the corporation will be taxed similarly to a partnership, with each shareholder reporting the profit or loss of the corporation on his personal tax return, in proportion to the percentage of shares he holds. This means that if there is a loss the shareholder can use it to offset his other tax obligations. If there is a profit it is taxed once, at the individual's tax rate, rather than twice (a "C" corporation will pay a tax on profits and individual shareholders will be taxed again when those profits are distributed as dividends.) We can do S Corporation status election with IRS for $25
Are there any drawbacks to being an "S" corporation?
The main negatives are the restrictions. There cannot be more than 100 shareholders; non-resident or non-US citizens may not be shareholders; and the tax year is somewhat inflexible (it usually must end on Dec. 31). Qualified trusts, or exempt organizations can be shareholders of an S Corporation. We can do S Corporation status election with IRS for $25
What is the difference between an "S" corporation and a Limited Liability Company?
In terms of reporting income, they are quite similar. The LLC is somewhat less restrictive than the "S" corporation. There can be any number of members, and there are few restrictions on who those members may be. They are also a relatively new entity, so there is not as great a definitive body of tax rulings on them as there is with corporations. We can do S Corporation status election with IRS for $25
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