What is a different between LLC vs Corporation, S-corp, C-Corp?
Updated time: Aug 07, 2020, 13:45 (UTC+07:00)
| Limited Liability Company (LLC) | General Corporation | S-Corporation | C-Corporation | |
|---|---|---|---|---|
| Formation | Delaware State filing | Delaware State filing | Delaware State filing. Within 75 days of formation, IRS filing of Subchapter S election is required | Delaware State filing. Within 75 days of formation, Form 2553 required to be filed with the IRS |
| Liability | Typically, members not personally liable for the debts of the LLC | Typically, shareholders not personally liable for the debts of the corporation | Typically, shareholders are not personally liable for debts of the corporation | Typically, shareholders are not personally liable for debts of the corporation |
| Raising Capital | Potential to sell interests, contingent upon Operating Agreement restrictions | Shares of stock are usually sold to raise capital | Shares of stock are usually sold to raise capital | Shares of stock are usually sold to raise capital. Venture capitalists and angel investors are typically a good source of funding |
| Taxation | Not taxed at entity level if properly structured. Profit/loss passed through directly to the members | Taxed at the entity level and shareholders receiving dividends are taxed at the individual level | Not taxed at the entity level. Shareholders are taxed at the individual level for profit/loss | Fringe benefits and owners' salaries can be deducted as business expenses. Shareholders may face double taxation |
| Formalities | Less formal meetings and minutes are required; state reporting required | Board of Directors, formal meetings, minutes and annual state reports required | Board of Directors, formal meetings, minutes and annual state reports required | Board of Directors, formal meetings, minutes and annual state reports required |
| Management | Members have an Operating Agreement that outlines management responsibilities | Shareholders elect Board of Directors to appoint officers for day-to-day management | Shareholders elect Board of Directors to appoint officers for day-to-day management | Shareholders elect Board of Directors to appoint officers for day-to-day management |
| Existence | Perpetual unless otherwise specified | Perpetual unless otherwise specified | Perpetual unless otherwise specified | Perpetual unless otherwise specified |
| Transferability | Contingent upon Operating Agreement restrictions | Shares of stock are easily transferred | Shares of stock easily transferred after observing all IRS regulations and ownership requirements | Restrictions on transferring shares of stock. |
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