Corporation, LLC, or Sole Proprietorship?
Corporations and LLCs are both excellent choices for business owners looking to minimize their personal liability and build greater credibility. But each entity also offers distinct tax and business advantages. Choosing the right one depends on the specific needs of your business. However, there is nothing wrong with sole proprietorship either. Here is the difference amoungst the three classifications:
Corporations offer personal protection against liabilities, tax savings, and the opportunity for raising capital. Corporations are also required to perform certain formalities such as holding annual meetings and keeping detailed corporate records (minutes).
Limited Liability Companies (LLCs) offers the similar personal liability protection as a corporation. However, the corporate formalities are reduced. LLCs are not required to hold formal meetings or keep detailed corporate minutes. In addition, they also offer great tax flexibility. Officers of the LLCs can choose to be taxed as either a traditional corporation or as a “pass-through” entity.
Sole Proprietorship is simply the individual business owner. There is no separate entity. Although it is a good practice for a sole proprietor to keep separate accounting records and to segregate his business assets and liabilities from his personal assets and liabilities, there is no legal distinction between them. All of the assets of the business are subject to the owner’s personal liabilities and all of his personal assets are subject to the liabilities of the business. However, many do create DBAs and other tax ID’s to help them with the legalities. We can help you set the entire system to help you stay legal and guide you as to what tax liabilities you need to keep up with.
CALL US AND SPEAK TO US FOR DETAILS TO SEE WHICH ONE IS THE BEST CHOICE FOR YOUR NEW VENTURE!