Should I Incorporate My Business as a Corporation or Form an LLC?
Both corporate entities are excellent choices for business owners looking to minimize their personal liability and build greater credibility. Each entity offers distinct tax and business advantages. Choosing the right one depends on the specific needs of the business.
Before deciding which type of corporation best suits your business needs, always consult with your legal or financial advisers. We at Global Corporate Services, Inc. do not offer legal or tax advice, but have business partners that do. We are a Delaware Registered Agent Services and are here to help you start your new business as quickly and cost effectively as possible.
What is the Difference Between a Corporation and an LLC?
Both corporate entities are excellent choices for business owners looking to minimize their personal liability and build greater credibility. Each entity offers distinct tax and business advantages. Choosing the right one depends on the specific needs of the business.
Both Delaware Corporations and Delaware Limited Liability Companies offer:
Personal liability
Tax savings
Increased opportunities for raising capital
All Corporations are required to perform certain formalities such as holding annual meetings and keeping detailed corporate records (minutes). However, corporate meetings and records can be held and kept anywhere in the world.
The Limited Liability Company, commonly referred to as an LLC, is required to have an Operating Agreement prepared after the company has been filed. This agreement can be prepared by an attorney or found in a Corporate Kit which can be purchased in our shopping cart.
Our fee to file either a "C" Corporation or an LLC are the same. Annual Maintenance Fees in Delaware however, are more expensive for the LLC. Either way both entities provide you with asset protection and should be considered in lieu of sole proprietorship when starting your new business.
Before deciding which type of corporation best suits your business needs, always consult with your legal or financial advisors. Global Corporate Services, Inc. is a registered agent in the State of Delaware and does not offer legal or tax advice. We are here to help you start your new business as quickly and cost effectively as possible.
For more detailed information, please be sure to speak with a qualified legal and/or financial advisor. You may address your questions to our Tax and Accounting Services at tax@global-inter.net.
General Corporation - C Corporation
The general corporation is the most common corporate structure. This type of corporation is a separate legal entity that is owned by stockholders. A general corporation may have an unlimited number of stockholders that, due to the separate legal nature of the corporation, are protected from the creditors of the business. A stockholder"s personal liability is usually limited to the amount of investment in the corporation and no more.
Sub-Chapter "S" Corporation
With a Sub-Chapter "S" Corporation you can deduct the profits and losses from your corporation on your personal tax return. You will no longer be considered a "C" Corporation. Prior to March 15th, you must file an IRS Form 1120-S. To qualify as an "S" corporation, you must be a US citizen or qualified resident filing a personal tax return with the IRS.
Close Corporation
There are a few minor, but significant, differences between general corporations and close corporations. In most states where they are recognized, close corporations are limited to 30 to 50 stockholders. In addition, many close corporation statutes require that the directors of a close corporation must first offer the shares to existing stockholders before selling to new shareholders.
This type of corporation is particularly well suited for a group of individuals who will own the corporation with some members actively involved in the management and other members only involved on a limited or indirect level.
Non Profit Corporation - Not For Profit Corporation
Non-Profit Corporations are formed for charitable, scientific, religious or educational purposes, etc. If the corporation is to qualify for tax exempt status by donations then it has to qualify with the IRS. Sometimes they are referred to as 501(c)(3) corporations. Without the IRS qualification any donated funds will not be considered a tax free exemption.
