I will tell you the difference between sole proprietor, c-corp, and s-corp.
The sole proprietor can do any kind of business they want to and take the income and claim it on their 1040 tax return schedule C. The owner is responsible for all profits and losses of the company and also all debts and liabilities. If the company can not pay for some reason the owner may have to come up with the money out of their personal assets.
An S-corp can have no more than 75 individual share holders and no non residents can be shareholders. They must hold shareholder meetings and keep the minutes in corporate book. The profits and or losses of the business flow through to the owners personal tax return. Owners are not responsible for debts and liabilities of the business. S-corps cannot be owned by C-corps or LLC or partnerships and s-corps cannot own 80% or more of another corporations shares.
A C-corp is an entity that can have many shareholders including other c-corps. They must hold annual shareholder meetings and the business is taxed as a separate entity and the owners are taxed again on any monies taken from the business. Owners are not personally responsible for losses or gains of the business. Stocks can be sold without approval.
Limited liability corporation (LLC)
Owners not responsible for debts and liabilities of the company. It is a pass through tax entity meaning its profits and losses generated by the business is reflected on the owners tax return. Unlimited amount of owners are allowed including non residents s-corps and c-corps other LLC or partnership. LLC's have a limited life span and a dissolution date must be given in incorporation articles. The interest in an LLC cannot be transferred. LLC's are not required to hold annual meetings.
We are massage business experts writing a book and understanding business a little better... You need to always consult an accountant or a lawyer before making tax decisions. They will give you the best advice based on your situation and your state.
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