Today's post highlights some important distinctions between corporations and LLCs to help you choose the right entity structure for your company.
It’s important to understand the significant (and sometimes subtle) differences between the various choices when determining the right entity structure for your new venture. Today’s post details some important distinctions between corporations and LLCs.
The Distinction Between State Entities vs. Federal Tax Elections
For state law purposes, there are two primary entities that the choice of entity generally comes down to: corporations and LLCs. Corporations and LLCs both offer limited liability to owners of the company. This means that (absent extraordinary circumstances) if the business is sued, only business assets are at risk and the ownerss personal assets will be shielded from the company’s liabilities.
For federal tax purposes, there are three primary tax classifications that most companies are organized under: C corporations, S corporations, and…