Tuesday, March 10, 2009

Choosing a Structure for Your Business~More Options

I thought it would be a good idea here to tell you about corporations. Here you can see the pros and the cons. Feel free to investigate on your own using the Internet! There is so much information and you can make an inform choice!

Choosing a Structure for Your Business
Small business owners should consider the advantages of both a corporation and a Limited Liability Company (LLC) when forming a new company. Selecting the right structure can help you maximize your chances for success. Though corporations and LLCs can both help protect personal assets from business debts, they differ in the following respects:

Advantages of a Corporation

May issue shares of stock to attract investors
Corporate income splitting may help lower overall tax liability

Advantages of an LLC

Has no limit to the number of owners
Owners can report profit and loss on their individual tax returns
Not required to hold annual meetings or record minutes

Disadvantages of a Corporation

Double taxation of corporate profits and shareholder dividends
Must hold annual meetings and record minutes
S Corporations have restrictions on number of owners

Disadvantages of an LLC

Cannot engage in corporate income splitting to lower tax liability
Cannot issue stock

Note: LLC owners can elect for the IRS to tax the LLC as a sole proprietorship, partnership, C Corporation, or S Corporation. Owners make this election through the IRS after the company forms with the state.

Sharon LaMothe
LaMothe Services, LLC

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