S Corp vs C corp vs LLC

S Corp vs C corp vs LLC

  • Submitted By: reonea08
  • Date Submitted: 05/03/2014 2:16 PM
  • Category: Business
  • Words: 1116
  • Page: 5

´╗┐There are various business formations, some of the most notable are the S corporation, C Corporations and the LLC. While these are all different forms of businesses they do share some similarities. These similarities make it somewhat difficult to determine which kind of business that you need to form. The ultimate decision making comes from the structural differences, and operating advantages and disadvantages.
An S Corporation is a corporation that elects to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level. To qualify for S corporation status, the corporation must meet certain qualifications. It must be a domestic corporation, have only allowable shareholders (including individuals, certain trusts, and estates and may not include partnerships, corporations or non-resident alien shareholders), have no more than 100 shareholders, have only one class of stock and not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations). To dissolve an S Corporation there are a few steps. You must first obtain a vote from the shareholders, second is to stop conducting business on behalf of the company, third is to notify each creditor in writing of the dissolution, fourth is to liquidate the assets, fifth is to file a certificate of termination with the finance department, or appropriate corporate regulating agency, in the state where the S corporation is registered, the sixth and final step is to file the final tax documents with the IRS.
A C Corporation refers to any corporation that for federal...

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