When you begin the process of creating a new business, it is important to determine the right structure. Learning the difference between a limited liability company (LLC), as well as the difference between an S and C corporation will help you to make the right decision for your business needs. This distinction is required to be able to use Gov Doc Filing when obtaining a business tax ID number.
Understanding the Difference
An LLC formation creates a company that will shield personal assets from the business liability as well as requires a separation of personal and business finances. This type of business has a flexible management structure and tax reporting options. With a corporation, you have the shielding in place plus the finance requirement, but you do not have the flexibility. This business type is preferred by outside investors and is recognized outside the US.
As far as taxes are concerned, a new corporation or LLC that is considering corporate taxation will need to choose to file as a C-corp or S-corp. an S-corp is giving the title of a pass-through entity so that the business itself is not taxed. Instead, the income reported on the tax returns of the individual is taxed. A C-corp does not have this distinction and the income will be taxed on a corporate level. If the dividends are distributed, then the income is taxed on an individual basis as well.
All of this information can be confusing to a new business owner. By working with a site like Gov Doc Filing, you will have 24/7 support to assist with any questions or concerns you may have. File the right way to get your business up and running, ready with a tax ID for identification purposes as well as tax claims.
Patrick Supernaw is the lead editor for Great Lakes Ledger. Patrick has written for many publications including The Huffington Post and Vanity Fair. Patrick is based in Ottawa and covers issues affecting his city. In addition to his severe hockey addiction, Pat also enjoys kayaking and can often be found paddling the Rideau Canal. Contact Pat here