C-Corporation
The C-Corporation acts as a separate legal entity which is distinct from
shareholders. There is no limit to the number of shareholders and shares can
be held by non residents and citizens who do not reside in the United States.
The corporation must pay federal and state income taxes on earnings. The
earnings are distributed to shareholders and the shareholders are also taxed.
Double taxation occurs.
Benefits of the C-Corporation
S-Corporation
The S-Corporation is generally exempt from corporate income taxes on
its profits. The shareholders pay income taxes on their proportionate
share of the profits. Shareholders report the income and pay taxes, if
any. One of the issues associated with the (C) corporation is that the
corporation along with its owners are taxable. This is where the term
"double taxation" comes into play because the corporate income is often
taxed twice.
Benefits of the S-Corporation
Sole-Proprietorships
A sole proprietorship is set up to allow an individual to own and operate a
business by him/herself. A sole proprietor has total control, receives all profits
from and is responsible for taxes and liabilities of the business . If a sole
proprietorship is formed with a name other than the individual's name, a
Fictitious Business Name Statement must be filed with the county where the
principal place of business is located. It is a very common, simple business
structure which is easy to start-up and maintain. However, you are the
business and any liabilities belong to you.
Limited Liability Partnership
The Limited Liability Corporation is similar to the S-Corporation. The profits of
the LLC go to the shareholders/employees rather than to the business.
Owners have limited personal liability for the debts and actions of the LLC.
Owners of an LLC are called members. Members may include individuals,
corporations, other LLCs and foreign entities. There is no maximum number
of members. Most states permit “single member” LLCs, those having only one
owner.
Benefits of the LLC
Partnerships
A partnership exists between two or more persons who join together to carry
on a trade or business. Each person contributes to the partnership and the
partners share in the profits as well as losses.
provide the necessary documentation online.
Shelf or Aged Corporations
You can also purchase a “shelf” or “aged” corporation in the State where you
want to do business. A shelf or aged corporation is one which has no activity
and is created and put on the “shelf” to age and use at a later date. There
are companies which sell shelf corporations.
See Case Studies for more information on how to choose the
correct Corporation for your business.
The C-Corporation acts as a separate legal entity which is distinct from
shareholders. There is no limit to the number of shareholders and shares can
be held by non residents and citizens who do not reside in the United States.
The corporation must pay federal and state income taxes on earnings. The
earnings are distributed to shareholders and the shareholders are also taxed.
Double taxation occurs.
Benefits of the C-Corporation
- Limited liability for the directors, officers, shareholder and employees of
the corporation.
- C-Corporations can attract potential investors through the sale of
shares of stocks.
- More than one type of stock can be issued.
- The C-Corporation exists whether or not the owners leave the business.
- Standard business expenses can be deducted as well as benefits to
employees.
- Fringe benefits may be deducted such as group term life insurance,
health and disability insurance, death benefits and employee medical
expenses not paid by insurance as a business expense.
- Shareholders who are also employees are exempt from paying taxes on
fringe benefits.
- Profit and loss can be split between the owners and the business to
lower the overall tax rate.
- Corporate losses can be carried over to future tax years.
S-Corporation
The S-Corporation is generally exempt from corporate income taxes on
its profits. The shareholders pay income taxes on their proportionate
share of the profits. Shareholders report the income and pay taxes, if
any. One of the issues associated with the (C) corporation is that the
corporation along with its owners are taxable. This is where the term
"double taxation" comes into play because the corporate income is often
taxed twice.
Benefits of the S-Corporation
- Limited liability like C-Corporations. S-Corporations are also considered
to be to be separate entities apart from their owners.
- Debts incurred by the corporation are the responsibility of the
corporation, not its shareholders, who can only be held accountable up
to the amount they invested in the corporation.
- No double taxation as in the C-Corporations. According to the Internal
Revenue Service, an S corporation is not a separate taxable entity, the
corporation's profits are considered to be the shareholders' .
- Losses appear on the shareholders’ personal income tax returns just
as profits do so at the end of the year if the corporation experiences
losses shareholders end up owing less or even no taxes after they
deduct their share of the corporation’s losses.
Sole-Proprietorships
A sole proprietorship is set up to allow an individual to own and operate a
business by him/herself. A sole proprietor has total control, receives all profits
from and is responsible for taxes and liabilities of the business . If a sole
proprietorship is formed with a name other than the individual's name, a
Fictitious Business Name Statement must be filed with the county where the
principal place of business is located. It is a very common, simple business
structure which is easy to start-up and maintain. However, you are the
business and any liabilities belong to you.
Limited Liability Partnership
The Limited Liability Corporation is similar to the S-Corporation. The profits of
the LLC go to the shareholders/employees rather than to the business.
Owners have limited personal liability for the debts and actions of the LLC.
Owners of an LLC are called members. Members may include individuals,
corporations, other LLCs and foreign entities. There is no maximum number
of members. Most states permit “single member” LLCs, those having only one
owner.
Benefits of the LLC
- Limited liability of the members for acts and debts of the LLC.
- No requirement of an annual general meeting for shareholders.
- Limited paperwork and record keeping as compared to the C-
Corporation and S-Corporations.
- No double taxation unless the LLC elects to be taxed as a C-
Corporation.
- Profits are taxed personally at the member level, not at the LLC level.
- In most States, not all, LLCs are treated as separate entities from their
members.
Partnerships
A partnership exists between two or more persons who join together to carry
on a trade or business. Each person contributes to the partnership and the
partners share in the profits as well as losses.
provide the necessary documentation online.
Shelf or Aged Corporations
You can also purchase a “shelf” or “aged” corporation in the State where you
want to do business. A shelf or aged corporation is one which has no activity
and is created and put on the “shelf” to age and use at a later date. There
are companies which sell shelf corporations.
See Case Studies for more information on how to choose the
correct Corporation for your business.
How to Structure Your Business:
Learn the various ways to set-up a business
www.rebuildcreditscores.com
Learn the various ways to set-up a business
www.rebuildcreditscores.com
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Links
It is very common for new entrepreneurs
to set up their business as a sole
proprietor. As your business grows and
expands, you may find the need to
restructure your business to ensure
optimal chances for financing, obtaining
large contracts or tax purposes.
Even after a decision is made, the nature
of your business may change and the
structure may need to change again.
Fortunately there are several options to
choose from. Some research and perhaps
the advice of an attorney may be
necessary when determining how to set
up a business but below are the most
common business structures.
to set up their business as a sole
proprietor. As your business grows and
expands, you may find the need to
restructure your business to ensure
optimal chances for financing, obtaining
large contracts or tax purposes.
Even after a decision is made, the nature
of your business may change and the
structure may need to change again.
Fortunately there are several options to
choose from. Some research and perhaps
the advice of an attorney may be
necessary when determining how to set
up a business but below are the most
common business structures.
More Resources
Business Opportunities
Home-based business
opportunities. Earn extra
income from your computer.
Bad Credit Business Loans
Find alternative funding
sources if you have bad credit.
Micro Business Loans
Do you need just a little cash
to grow your business try a
microloan from the SBA.
Business Loan Sources
A little creativity and al lot of
determination can get you the
money you need.
Home-based business
opportunities. Earn extra
income from your computer.
Bad Credit Business Loans
Find alternative funding
sources if you have bad credit.
Micro Business Loans
Do you need just a little cash
to grow your business try a
microloan from the SBA.
Business Loan Sources
A little creativity and al lot of
determination can get you the
money you need.
Business Credit
How to Build Business Credit
Separate from Your Personal
Credit in 10 Steps
How to Build Business Credit
Separate from Your Personal
Credit in 10 Steps
Determining how to structure a business is one of the first steps an
entrepreneur must make. The proper business structure may make the
difference between being approved for a small business loan and even
business credit cards.
entrepreneur must make. The proper business structure may make the
difference between being approved for a small business loan and even
business credit cards.
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