There are several business entities to choose from. We’re about help you make a decision by discussing the pros and cons of each.
Here, you will learn the difference between the 4 main business entities: S-Corporations and C-Corporations, LLCs, and Non-Profits, so you can decide which of them suits your purposes.
LLCs can be described as a hybrid between partnership businesses and corporations. This business model is best suited for startups or smaller organizations because of the following reasons:
These benefits do vary from state to state. This is why we also recommend our clients double-check their state’s LLC formation resources before deciding.
Like S-Corporations and C-Corporations, LLCs offer the advantage of limited liability protection for their owners. In other words, your business assets will be owned separately by the LLC instead of any individual (or group of individuals). Any liability for an LLC (for example, lawsuits, monies owed, depreciation, etc.) is purely the liability of the respective business. In other words, it would generally not affect the owners’ assets.
LLCs are generally given a fair pass when it comes to federal income taxes. In other words, an LLC will not be legally bound to pay taxes on business income. Instead, LLC members are bound to pay taxes on their share of the profits made by their LLC. With that said, LLC taxation is quite similar to how a sole proprietor or partnership business handles its taxation.
LLCs may offer a separate entity for liabilities but they are also liable for various types of taxes, for example:
Typically, taxes are treated as a business expense and they do not flow through the owner’s tax returns.
START LLC NOWS-Corporations are business entities that were designed and implemented into law by Congress in 1958. This business entity was created to encourage family and small business formation, ending double taxation for conventional corporations. The main benefits of S-Corps include:
The policies and costs of setting up various kinds of LLC will vary from state to state. This is why we also recommend our clients double-check their state’s LLC formation resources before deciding.
Unlike good ol’ C-corporations, S-Corps aren’t liable to pay corporate income taxes. The IRS regards S-Corporations as a separate tax identity. Similar to LLCs, the profit generated by this business model will flow onto the shareholders’ personal income tax returns and will be subtracted from there. When you form an LLC, you will have the option to get treated like S-Corps for taxation purposes. This offers the advantages of both LLC and S-Corps as follows:
Our business consultants will be at your disposal round-the-clock if you would like to learn how to save yourself for taxes after filing an S-Corporation business.
START COMPANY FORMATIONC-Corp or C-Corporation is a kind of business entity that is regulated and formed on a state level. They can be created by filing ‘Articles of Incorporation’ within the state of incorporation and with the secretary of state. C-Corps are the most formal companies and boast a holistic corporate structure. The cost and policies involved in forming a C-Corp will vary from state to state. However, some of the factors that you should consider include:
Unlike Limited Liability Companies and S-Corps, a corporation needs to file corporate tax returns and is required to pay taxes on their profits. When these taxes are returned to shareholders in the form of dividends, they are subject to taxation based on each shareholders’ tax returns. This is a short explanation of what ‘double taxation’ entails.
START COMPANY FORMATIONA Nonprofit Corporation is a corporation formed for the public good, such as educational, religious, charitable, or other public service purposes. Unlike other corporations, the most significant advantage of picking this legal business entity is to exempt yourself from state and federal taxes on anything the corporation earns. The process of setting up nonprofit corporations mimics that of establishing corporations for business purposes or profits. You can read up on common tax exemptions for nonprofit organizations on Internal Revenue Service’s Section 501(C)(3) – which is also why these types of corporations are also called 501(C )(3) corporations.
START COMPANY FORMATIONIn a nutshell, sole proprietorships, as the name suggests, have just one owner whereas partnerships have more than one owner. Even though they may not have as holistic structures as their alternative, they are pretty simple to establish and maintain. As compared to LLCs and corporations, sole proprietorships is established as soon as you receive money for your products or services. Simply put, you wouldn’t need to file any form of paperwork. On the other hand, partnerships may be established by a partnership agreement, or you could just have an informal relationship with a partner and launch a business after signing a contract and shaking some hands. The benefit partnerships have over sole proprietorships is that you share resources, responsibilities, and losses with your partners. Of course, you may also face disagreements on how to run your business and you will also have to split your profits.
START COMPANY FORMATIONWe make incorporating a company as easy as possible, so you can focus on the important things. Beyond free LLC
We crosscheck your business name with databases in your state
We prepare your business formation documents and submit them to the relevant state authorities
Our registered agents will ensure that you never miss legal notices and this agent will work with you for an entire year
We prepare and file your S-Election documents (Form 2533) with the IRS
We store digital copies of your start-up’s legal documents and retrieve them upon your request
Our support staff are always available to answer your queries via phone or email
We will offer your new business entity expert tax consultation to save more money from your business income
Our business funding and credit experts review your financing and credit needs to recommend appropriate solutions.
We offer end-to-end, 100% online company registration and management solutions. Register your business in just a couple of steps.
Pick a state and business entity and get your project started with a few clicks.
REGISTER LLC TODAYPlease refer to our FAQ section if you have any questions regarding business formation or the nature of our services. Our knowledgeable consultants are available round-the-clock via phone or live chat if you still have some unanswered questions.
We form LLCs by filing your Articles of Organization with the Secretary of State and designing a professional Operating Agreement with inputs from all members. We also strive to maximize your business’s corporate protection which is why we offer initial consultation regarding: • Whether LLCs are the best type of entity for your business • The most effective method of forming your LLC • How best to operate your LLC • The on-going legal considerations once your LLC is formed.
LLCs offer a certain degree of corporate protection in that their members aren’t personally liable for the debts that arise in their business. However, this protection will be limited, and our experts will be more than happy to help you understand where your liability begins.
Corporations are separate business entities that are formed to benefit shareholders. For starters, the individuals that own a corporation are called shareholders. In contrast, the individuals that make all the major decisions in the corporation, are called the Board of Directors. These individuals are elected by shareholders at least annually.
Corporate formation begins once we file your Articles of Incorporation. However, there are many other documents that we can assist you in preparing and filing to ensure your corporation is formed effectively and completely. We also offer legal advice on maximizing your corporate protection, just as we do with LLCs.
A business can typically be formed as a sole proprietorship, partnership, LLC, or corporation. With that being said, we can help answer your question by first explaining: • How each business entity is formed • How each business legally operates • The ongoing legal requirements of your business once formed • The effect of your plans for owning or selling your company or adding future investors We’d love to take our time to answer all the above questions once you contact our talented business formation experts.
The following are just some of our favorite testimonials from past clients.
“LLC Business File was quick, professional, and worth every penny for our business formation needs. They also supplied us with regular articles and case studies about how to become a fundamental player in their field of expertise.”
“I’ve utilized their services to launch 3 businesses and I’ve always received quality and speedy services from their teams. Also, all 3 of my brands are now receiving positive feedback from their respective target audiences.”
“I am pleased with every aspect of their services but what I love most is that they have a quick and efficient business formation process which was pretty easy to follow as well.”
“Not only did they help set up my LLC but they were always reachable via phone call whenever I had some legal queries. I highly recommend working with them to receive quality services and to learn a thing or two along the way.”
© 2022. LLC Business File All Rights Reserved.
