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GROWTH AND DEVELOPMENT SERVICES CORPORATION
What
are the Pros and Cons of LLCs Vs. Corporations?
    
While we are not
attorneys, we have done some extensive research in the areas you
are interested in and we may have some ideas that will help you
accomplish your goals. Since I do not know your personal goals
regarding your current form of business or the exact purpose
(asset protection, liability protection, estate planning, tax
minimization) for your company, it is difficult for us to give
you an opinion, but we'll try.
 | Some of
the basics are that :LLC's and Corporations are created
by the state they are formed in with the following
features. They are born of legal age, can create and
enter into contracts, the owners are usually protected
personally from assaults on their assets. Both can be
used to gather investor capital and both can limit your
personal liability.
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 | The
differences mainly involve how management has a say in
the operation of the business, and in many instances, how
the IRS handles the income tax positions.
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 | Corporations
have four basic characteristics. Namely, Limited
Liability for the stockholders, unlimited life,
centralized management, and free transferability of
shares. LLC's typically will be taxed as a corporation
(company profits taxed, and then owners taxed on any
distributions of income), if more than two of the above
characteristics exist for that form of business
ownership. If less than three characteristics exist in an
LLC, the LLC is normally taxed as a partnership, without
the unlimited liability of a partnership. An S type IRS
classification on a corporation is also taxed as a
partnership, but still with limited liability of the
owners. We see several advantages to the LLC compared to
the S classification of a corporation being that S
corporations owners must be actual people that are
American citizens. If these rules are not followed for
the S corporation, it will be taxed doubly like a C
Corporation. The LLC, we believe, on the other hand, can
be held by foreigners, trusts, other LLC's, Corporations,
or any other legal entity, yet still taxed as a
partnership.
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 | Many
times, depending on your personal goals, one or more of
each of these entities can be used together. Some of the
deductions in the form of employee benefits are not
allowed with an LLC and you should seek legal or
accounting advice on these areas. On the other hand, the
LLC, if it follows the less than three characteristics I
named above, will be taxed only once as a partnership.
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 | Since
we are not lawyers, what we are telling you, is simply an
opinion and we have to preface everything we say with
"We don't know, but We have heard".
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