C Corp, S Corp, and LLC

There are many pros and cons to a C Corporation, S Corporation, and Limited Liabilities Company. However it is essential to analyze your company before you decide which category you want. A C corporation is regarded as an individual entity, which means there will be less liability on the owners because they will be shareholders. Thus, if the company is sued the owners will only be sued for their investment in the company. However, as a corporation, they are subject to double taxation, once at a corporate level and another when they pay shareholders their dividends. If I were to start an S corp, I should expect higher expenses to my accountant and more responsibility on tax returns. S corporation tax returns are more costly to prepare because of its complexity and length. Also an S corporation is typically required to submit balance sheets as part of its tax return. On the other hand, if my business makes a substantial profit, an S corp can save thousands of dollars per year in taxes. Pro's of a limited liability company include avoiding double taxation and the manager typically is highly rewarded for a profitable company. The downside of an LLC is that they are not well understood, so not many people invest in them.