A Close Look at S Corps, LLCs and Sole Proprietorships<\/p>\n
Factors<\/p>\n
Sole Proprietorship<\/p>\n
LLC<\/p>\n
S Corp<\/p>\n
Personal liability of owners<\/p>\n
Unlimited personal liability<\/p>\n
Members (owners) are not responsible for the debts of the LLC. If the LCC fails, the members can lose, at most, the value of the investment in the LLC.<\/p>\n
Shareholders are not responsible for the debts of the corporation. If the corporation fails, the shareholders can lose, at most, the value of their investment in the corporation.<\/p>\n
Taxation<\/p>\n
Single taxation of income to sole proprietor<\/p>\n
\u201cCheck the box taxation\u201d. An LLC can choose whether to be taxed as a corporation or as a partnership (pass through taxation).<\/p>\n
There is no taxation of the S corporation itself. The earnings are passed through to the shareholders who are taxed at their individual rate on their individual tax returns.<\/p>\n
Control or management of the business<\/p>\n
Complete control by sole proprietor<\/p>\n
Members enter into an operating agreement under which the division of management rights e.g., committees, voting is established.<\/p>\n
Shareholders elect directors who set broad corporate policy. Directors appoint officers to carry out that policy, aided by employees.<\/p>\n
Continuity of business<\/p>\n
Ends at death of sole proprietor<\/p>\n
Depends upon state statute creating LLCs. Some states allow perpetual existence.<\/p>\n
S corporations may continue as long as the business qualifies under the Federal Tax Code and the rules and regulations of the IRS.<\/p>\n
Raising capital<\/p>\n
Dependent upon assets and credit of sole proprietor<\/p>\n
In addition to the capital contributions paid in my members, the LLC can borrow money as a separate entity.<\/p>\n
S corporation may issues securities such as stocks and bonds, and\/or borrow money based upon the corporation\u2019s credit.<\/p>\n
Complexity of setup and maintenance of business form<\/p>\n
No government permission required, few (if any) legal costs<\/p>\n
In some states a single individual may form an LLC. Ohio allows this. To form the LLC, article of organization must be filed with the state. Members also need an operating agreement. There are minimal filing fees.<\/p>\n
S corporation are created by the state. Incorporators must submit articles of incorporation and pay appropriate fees to the state. In addition, the S corporation must elect this tax status with the IRS.<\/p>\n","protected":false},"excerpt":{"rendered":"
A Close Look at S Corps, LLCs and Sole Proprietorships Factors Sole Proprietorship LLC S Corp Personal liability of owners Unlimited personal liability Members (owners) are not responsible for the debts of the LLC. If the LCC fails, the members can lose, at most, the value of the investment in the LLC. Shareholders are not […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[10],"class_list":["post-96717","post","type-post","status-publish","format-standard","hentry","category-research-paper-writing","tag-writing"],"_links":{"self":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/96717","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/comments?post=96717"}],"version-history":[{"count":0,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/96717\/revisions"}],"wp:attachment":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/media?parent=96717"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/categories?post=96717"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/tags?post=96717"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}