Which Business Structure is Right for You?


Corporation (C Corporation)

A Corporation is a legal entity composed of one or more shareholders and have a board of directors who help manage the company. Corporations can issue stocks or bonds which helps to generate capital and investment opportunities. In this structure, the business is held responsible for the actions and debts it incurs instead of the individuals who own or work for the company.

Advantages:

• Limited liability

• Ability to generate capital through stocks

• Corporate tax advantage

• Attracts employees due to company benefits.

Disadvantages:

• Costly administrative fees

• Complicated tax and legal requirements

• Double taxation

• More paperwork

Limited Liability Company

Limited Liability Companies combine features of both a partnership and corporation. An LLC offers flexibility in regards to cost and profit sharing arrangements. The organization of the business can consist of one person or several individuals. LLC’s are taxed similarly to Partnerships as the profits and losses are passed through to the owners. Each member just reports thebusiness gains and losses on their federal tax return.

To incorporate an LLC, you must:

1. Choose a business name

2. File Articles of Incorporation

3. Create an operating agreement (optional but suggested if there is more than one owner)

4. Obtain the necessary licenses and permits

Advantages:

• Limited Liability