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Getting More Knowledge Regarding LLC vs. Corporation

Know that LLC and corporation are actually legal entities that would provide liability protection for those business owners. A corporation may have been there for such a long time but you must know that the limited liability company was created to offer the same level of protection. The LLC was actually created for those small business owners. This is going to give the same liability protection as the corporation but this allow a much simpler operational structure and also with much lesser formalities as well.

The limited liability company or the LLC provides more tax options as compared to the corporation. Owners of such LLC may actually choose for the profits to get taxed according to that pass through structure or that single layer taxation or one which is actually pursuant to the C corporation which is double taxation or the S corporation structure meaning single taxation but with a lot of requirements and there are also ongoing compliance requirements.

You have to know that the corporation only has that C corporation or S corporation taxation as an option. Small business owners may often choose the LLC pass through taxation for a reason that this allows them to avoid the double taxation of their profits and in many cases to take the business losses and minimize their taxes from the other income without having to worry about meeting the list of such S corporation requirements.

The S corporation is actually available in two kinds of entities and this would let a particular number of owners and everyone should be individuals and not entities and they need to be permanently residing in the US. Moreover, there are other requirements too and you may check with the accountant so that you will know the specific details.

There are many changes that take place and even the S corporation tax status is evolving and for such reason, you should always be on top of the latest requirements for that S corporation. When you are not able to meet the requirement, though accidental, this can surely result to very disastrous penalties and tax liability. When speaking of self employment, the S corporation may also have those tax benefits unlike the standard pass through. In such situations, you will have an option of the S corporation taxation with the LLC or such corporation.

With the flexibility and the simplicity of the limited liability company or LLC, this was made to provide advantages just like a corporation but without those disadvantages. For this, the number of LLC formations each year has exceeded the incorporations when you pertain to small businesses.

But, there are also situations in which the corporation can be the better entity option. You have to use the corporation when you are planning to take the business public or when you want to have that IPO.

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