What are the differences between Corporations and LLC’s?

C  Nevada Corporations and LLC’s are formed under the jurisdiction of Nevada Statutes in Nevada, and may have issued or un-issued stock (unwise). Issued stock always translates into ownership-proof for shareholders, and should always be backed by some form of value (CPA’s are normally required to set up stock funded accounts.).

C Typically, Nevada Corporations are managed by a board of directors (In Nevada, one person may be all officers of a corporation), which is another way of saying, a board of officers. Officer designations are normally titled Secretary, Treasurer, Vice President and President. To name more officers is to designate them as Directors. Of course, a single Director can control and own a corporation without being a designated named officer. Thus, ownership-position and bottom line authority in a corporation are determined by one's ownership of stock, not one’s title.

C  Nevada LLC’s, or better known as Nevada Limited Liability Companies, either have members and/or managers, or both, as opposed to directors and officers of that of a corporation. A Nevada LLC may be managed by one or more managers, or by one or more members, or both in Nevada. Ownership of Nevada LLC’s typically are so because of issued Membership Certificates (a form of non public stock), which are to be logged, issued, funded and recorded in something called an Operations Agreement. Operation Agreements set the guidelines of how to operate a Limited Liability Companies amongst its manager(s) and/or member(s).

C  Forming a Nevada Corporation or LLC is the first step for informed people and business proprietors to protect their assets; that is, if they choose Nevada. The benefits of forming a corporate entity are varied and many. Oftentimes the benefits of any corporate entity far outweigh the benefits of a sole proprietorship.

C  Now Nevada Corporations and LLC's provide unique liability protection, whereas failing to incorporate provides no liability protection whatsoever. As already mentioned, Nevada provides the strongest corporate veil of all the states, and has never been pierced (Now incorporating online!). In the liability protection afforded Nevada Corporations and LLC's, creditors can't pursue an officer or member/manager's personal assets for business indebtedness.

C  Consider, then, that corporate entities have tax favorable savings compared to that of being a proprietorship: self-employment taxes; life insurance; owner-officer health insurance premiums; corporate improvements on personal property for reason of corporate image, and many more. The Nevada Corporation Handbook, sold at Amazon.com, is a great reference to the do's and don'ts of corporate entities, and a guide to proper deductions.

C  Unlike the profit of C Corporations, the profit-income of S Corporations and LLC’s are passed-through to the individual and reported on the individual's personal income tax return, instead of being taxed first before the profits are divided. For the record, there are fewer restrictions on LLC ownership compared to that of S Corporations (One hundred shareholders is the maximum for S Corporations.). Be sure to check with your CPA for proper guidance.

What are the differences between C Corps and S Corps?

C  If an officer-stockholder dies or puts their personally held shares on the market, the corporation continues to survive, unless it is formally put to rest. One advantage of corporations is that they may raise funds by distributing stock to persons who want to invest in that corporation.

C  In basic words, a C Corporation is a regular or normal corporation. Comparably, an S Corporation has the same qualities but different advantages. One of these is that the profits, instead of being taxed, go directly to a person’s personal income. In other words, an S Corporation offers single taxation while avoiding the double taxation of C Corporations.

C  Double taxation for C Corporations means that C Corporations pay taxes at the corporate level, and then again on dividends, bonuses or salaries. S Corporations on the other hand, file a unique election with the IRS to obtain S status, which means, again, that the profits, instead of being taxed twice, pass-through to a person’s personal income. If an S Corporation is sold, the taxable profits are usually less than that of C Corporations.

C  On the drawbacks of S Corporations is that each owner must be a citizen of the United States, or at least a longtime resident. Also, there is a limit to the number of shareholders—the limit is seventy-five. Moreover, preferred stock is not allowed—coupled with the fact that only one kind of stock may be issued. In sum, a few more restrictions are that  banks, financial institutions and insurance companies aren’t allowed to have S status. (Now incorporating online!)

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