Neither is "better" they are used in differnet circumstances and both have benefits depending on what your company does and needs. LLC's have tax benefits and allow you to run it more as a partnership. Corps have to have a board of directors and can be bought out (you would own less of thecompany). If you are going into business on your own, then an LLP is better.
Do you mean LLC not LLP ? LLP means with partnership with someone.. I find that Corps have lower Annual fees, But I think LLC have lower tax fees .. but not sure.. I have never try it.. Thank you for reply
I know about LLC, but I'm confused about the differences between LLC, and LLP, they're both partnership business types? With Corporations you can still buy your own shares and take control of the company, so yes, you do have a part of the company.
It depends on what you want to do. Corps offer more protection but are more expensive to setup (and tax-wise).
I think LLC's are best for a small business. With corporations you get what is called double taxation. You get taxed twice. LLC's have better tax advantages. Corporations require a board and you have to "capitalize" it with stock at startup, its a pian in the butt. LLP's are similiar to LLC's but are for partnerships.
I agree with kevbo. For small businesses and entrepreneurs, I believe that LLCs offer better tax advantages, and of course you do not need a board of directors as with a normal corporation. If you live in the US and are engaged in internet marketing, probably one of the best places to set up an LLC is in Nevada, as there is no state tax there. and the rules and regulations are extremely hospitable and accommodating to small businesses.
I think it's favorable to have a LLC if you make less than 250k per year and a Corp if you make more but I'm not a lawyer so it's best to check with a legal professional.
I disagree with just about all the wisdom presented here. Be forewarned I am not IN ANY WAY QUALIFIED to offer "Legal" advice. Nor am I a tax expert. What I know and understand I've learned from poking around, asking questions and generally dealing with issues as they arise. That said, I'd go with a C-corp. LLC's or Limited Liability Corporations are a relatively new invention that is often treated like a poor cousin in many states. A lot depends on the state of incorporation, but generally speaking, the facts will bear me out. In several states I've seen, they even impose additional taxes or fees on an LLC so much for protection from the co-called "double taxation". Double taxation is a somewhat of a misnomer, if not a myth. What does this term refer to? Basically double taxation refers to the fact that corporations are taxed and then any dividends distributed from profits are taxed again as income, hence "double taxation". Okay. Granted. If you are going to do something like this than yes, you will get taxed twice. In real life, this is the most foolish way to handle profits. Most small corps are going to reinvest profits. These are called "retained earnings". So what if you want to pay a dividend? Why bother? If you are the sole stockholder (or your family is) why not just pay a bonus? Bonus pay is treated as an expense taxwise for the corp. For the recipient it is income and is taxed at the "regular" rate. What about the board of directors? In most states only 1 board of director is needed. If you need more, they can be anyone chosen by the stockholder(s). All the board of directors do for the most part is meet once a year. Big whoop. So what are the advantages of a c-corp? For one thing the rules governing them are well known and established. You are less likely to stumble across some of the weird restrictions an LLC is often tagged with. As far as what state is best to incorporate in, there are few compelling reasons to incorporate in any state other than the one you are in. Nevada likes to tout a stronger "corporate veil" to protect assets, but this is more of a deterrent rather than a protection. Like they say - a lock only keeps honest people out. If you do incorporate in one state while doing business in another, you'll need to register as a "foreign corporation" in any state you have a presence in. So if you live in CA and start a NV corp, CA considers your corp a "foreign corporation" if you conduct business in your home state. Essentially you are paying registration fees twice. Plus fees for foreign corporations are often higher than domestic corps. Keep in mind, I'm speaking from knowledge gained from specific research I performed months ago. Things change. Do your own research specific to your own state and needs for a better picture of what's right for you. I did come across other factors that solidified things in my find favoring c-corps that I did not mention here. I'd have to go back and verify my findings before bringing them up here as they could stir up a hornets nest worse than I already have. Regards, Andy
This is very true, and I never realized it until I started one. LLCs arent even recognized by the IRS, only recognized on the state level. You have to elect your taxes to be done as a sole proprietor, corporation or partnership - "LLC" isn't even listed as an option.
A Limited Liability Company is to a Corporation, as a pontoon boat is to a cargo ship. It's really not that extreme of a difference, but I couldn't think of anything larger than a pontoon boat yet smaller than a cargo ship at the moment. Hopefully you get the idea.