Wednesday, February 18, 2015

Jeffrey Volosin Discusses The Difference Between LLC And C Corps for Businesses

As being a part of the business world, it is important to understand different terms. Educating oneself on these terms not only helps with learning and understanding business conversation, but lets people know that the businessman (or woman) is serious and truly knowledgeable in the field. The two terms professionals should be able to know are a limited liability company (LLC) and a C corporation. While they are both structures, they both have their different traits and can allow many businessmen and businesswomen know what is most suitable for a business. Both have an indefinite term of life, but LLCs having plenty of distinguishing traits.

A limited liability company (better known as an LLC) is a specific type of business entity that mixes the personal liability protection of a corporation with the tax benefits of a partnership. It is a structure that offers protection to a company's owner. An LLC is best suited for small businesses with very few shareholders.

A limited liability company's taxation is a single taxation, which means the interests of the profit or loss is passed to members who are in the top 39.6% bracket. An LLC has the option to elect to be taxed as a corporation. Only the members own and manage an LLC. It has limited liability. In other words, the liability is not exceeded by the amount invested by members. Meetings for members are not required, but activities should be recorded.

A C corporation is a complete opposite. It is a specific type of business entity that is taxed separate from its owners. It is used for medium and large-sized corporations and owned by its shareholders; this is different from an LLC since LLCs deal with small businesses with a few shareholders. C corporations are managed by officers while LLCs are managed by the members or managing members themselves.

Another trait of C corporations is that it uses a double taxation in lieu of a single taxation that is seen in LLCs. Income is taxed roughly 34% and shareholders pay taxes on profits distributed. The choice of taxation structures are not allowed with C corporations, they must be taxed at a corporate tax rate. Shareholders are required to attend board meetings whereas stated for LLCs, meetings are not required. While these differences may be broad between the two types of corporate structures, knowing the differences allows professionals to make the right assessments for future businesses.

If you are looking for more information on incorporating your small business, please visit to get find out more.
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