Help Me Decide: What Type of Corporate Entity is Best?
LLC, C-Corp or S-Corp? Which is Best??!?
Most small businesses will be best served by a LLC
Most of the time, a small business is best served with forming a limited liability company (or LLC). LLC’s are inexpensive to form, and inexpensive to operate. They are also flexible from a tax perspective, and provide all the benefits most business owners need.
However, there are important limitations for LLC’s in certain scenarios, and when confronted with such a limitation, the business owner then needs to decide what other entity type is appropriate for their potential needs. To help with this endeavor, we have prepared the following chart. If you have a specific need, and that need has a red X for an entity type, you can take that entity type off the list of possibilities.
Entity Types: Which is Best for Me??!?
|Shares can be freely sold on the open stock-market, and can participate in an “IPO”?|
|Can have foreign owners or corporate owners?|
|Can have different levels or types of stock (i.e. common versus preferred)?||(read)|
|Profits and losses can “pass thru” to the owners?||(read)|
|No annual reporting requirements to the state (other than income tax reporting)?|
|Can save on self-employment and Social Security/Medicare taxes along with the FICA (Federal Insurance Contributions Act) tax?||(read)|
|Can have more than 100 owners?|
|Can avoid having formal shareholder meetings?|
|Can avoid potential double-taxation?|
|Can have different levels of ownership, voting and profit distributions?|
Most Business Owners Start Off with a LLC
That doesn’t mean a LLC is right for you. If the table about doesn’t address all your questions or concerns, please contact us to discuss your particular needs and how those needs may fit into a particular corporate structure. Additionally, the above table doesn’t address special entity types, such as limited liability partnerships (LLP’s), limited partnerships (LP’s), professional corporations (PC’s), etc., contact us to learn more.