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What Is The Difference Between An LLC And A C Corporation ?

What is the difference between an LLC and a C Corporation ?

What is the difference between an LLC and a C Corporation?

An LLC stands for Limited Liability Companies, a type of corporate entity that is enshrined in an operation agreement in which the owners ( or members in other words) decide how this is being run and the profits and liabilities are being calculated and distributed among partners(or members in another word).

LLCs are business companies that provide limited liability for their founders or members. Unlike directors in the UK, Singapore and Hong Kong, where directorship entails personal liability if any of the stakeholders within the limited company decide to go down the legal path, The legality of LLCs in the US protects the owners’ assets from embroidering in any legal repercussions.

For tax filing, LLC members can file personal tax returns. This means a  Limited Liability Company doing business in Delaware is classified as a partnership for Delaware income tax purposes. A single-member LLC that does not elect to be treated as a corporation will be classified as a “disregarded entity,” which is taxed as a sole proprietorship for income tax purposes.

A single LLC separates personal assets from business liabilities. Incorporating an LLC separates business assets from business liabilities.

The advantages of an LLC are:

Ability to register as  a “disregard entity” for tax purposes

Limited liability, separating between company liabilities and personal liabilities

Greater business flexibilities

A C Corporation, on the other hand, is a legal entity and has shareholders and directors in the organisation. A C Corporation is named for the subchapter of the Internal Revenue Code—subchapter “C”—from which its tax designation is described.

The advantages of a C Corporation are :

C-Corp Advantages

No restrictions on the amount of shares  or identities of shareholders

Limited liability for all shareholders and directors
Able to issue more issues

This article should not be construed as legal advice and is not intended to be relied upon in relation to any tax or legal advice. The information we provide does not address your particular requirements and is for informational purposes only. It does not constitute any form of legal advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances and is not intended to be relied upon by you in making any decisions that may arise from reliance on materials contained on our website. 

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