Outline the main distinguishing features of a limited liability company (LLC), an S Corporation, and a C Corporation. Identify the best type of business entity for tax purposes. Be sure to provide your rationale. Finance Assignment

These are the key distinguishing characteristics of an S Corporation (limited liability company), and C Corporation.
Find the right type of business entity to be taxed.
Be clear about your reasons.

 

Finance Assignment

 

Answer

For tax purposes, the IRS doesn’t recognize limited liability companies (LLCs) as company forms. The LLC structure might protect the personal assets of a company owner in a case of business litigation. LLCs are often easier to run than straight S or C corporations. A typical corporate requirement is to hold annual meetings and keep minutes. These rules are not applicable to LLCs that are taxed under the corporate umbrella. An LLC has the ability to change its legal form at any time. Once the company is successful, it is possible to convert an LLC that was taxed under a partnership to a S-corporation. The LLC umbrella does not affect taxation, except in the most extraordinary of cases. A LLC can still decide whether to operate as a sole proprietorship or partnership.

S corporations can be incorporated by small- and medium-sized private businesses. Scorporations, partnerships and proprietorships are all known as “pass through” entities. Pass-through entities are those whose taxable income is “passed through” to their personal tax returns and then taxes there. S-corps & –

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