Limited Liability Companies (LLCs)


When first selecting the format for a new business, many smaller business persons (particularly) rarely consider an LLC, unless they are alerted in the beginning by their lawyer or CPA. Their usual concerns are only:

  • “Whether to incorporate or not.”
  • And if so, “whether to select a C or S corporate form.”

Yet an LLC, for tax purposes, can be classified into whatever form of business is desired. So it should at least be considered as part of the initial process in formation of any business or investment entity.

LLCs are business entities created under state laws. They are owned … Read the rest

C Corporations



While all three forms of entities can serve to limit the liability of the owners, the essential difference with C Corporations is in the matter of taxation (and then available fringe benefits).

Both S Corporations and LLCs are taxed as if they were partnerships, in that there is no federal tax usually levied on the entity. Only the individual owners pay taxes on the net income (as with partnerships). However the C Corporation is subject to “double taxation” to the extent it shows net profits. First, the corporation pays taxes on the net earnings and then the individuals are … Read the rest

S Corporations — the Good, the Bad and the IRS


According to the IRS, close to 60 percent of all corporations are S Corporations and that the total is more than 3,000,000 of such corporations. The overriding reason for electing to be an S Corporation is taxes. These corporations (except in rare instances) are not subject to corporate income taxes, but rather have the tax treatment of a partnership, in that only the “owners” are taxed — and not the entity itself. Thus they avoid the “double taxation” problem of a regular C Corporation in which both the corporation and (later) the shareholders can be taxed on the same Read the rest