There are many considerations to take as you decide whether to incorporate your business as a limited liability corporation or an S corporation. One of the most significant advantages of forming your Nevada business as an LLC or an S Corporation is that you are offered protection for your personal assets from the creditors of your business. Another similar component of LLCs and S corps is that they help eschewed your from paying both personal and corporate taxes. In this article, we will first cover what individually defines an LLC and S Corp and then discuss the pros and cons of each entity.
LLC stands for limited liability company. An LLC is a legal entity or business structure that offers protection to the business owner from any personal liability for any debts that their business may sustain. If you are in the process of opening a business, or currently operating a business as a sole proprietor, you should strongly examine forming an LLC. Forming an LLC is particularly important if you are apprehensive with limiting your personal legal liability. Nevada Small Business Consulting offers comprehensive packages with everything you will require in regards to opening a legal LLC with Employer Identification Number (EIN) in Nevada.
S Corporation stands for Subchapter S corporation, or occasionally referred to as Small Business Corporation. One of the main advantages of S. Corporation is that it is a specialized tax status offered by the IRS that allows corporations to pass their corporate income, credits and deductions through to their shareholders. We have included a list of some of the key advantages that S. Corporation status offers its beholders below.
- Business owners, shareholders, and employees will benefit from limited liability protection.
- Pass-through taxation, which means that rather than paying corporate taxes, an LLC’s profits will pass through to its members to be reported on their personal tax returns.
- The complete removal of double taxation of income.
- Straightforward transfer of ownership. Interests in an S corporation can be freely transferred without triggering adverse tax consequences.
- Salary and dividend payments. The ability to opt to receive both salary and dividend payments from the corporation. This can offer an S. Corp beholder a lower tax bill overall.
- Once-a-year tax filing requirement.
How you structure your business and choosing between LLC vs. S Corporation can have a major impact some significant components on the success and longevity of your business. The most major components include your level of exposure to liability and how your business is taxed by the Internal Revenue Service. It can also influence your sources of financing and your ability take your business to the next level and your business operation procedures. There are many factors that must be taken into consideration when forming an LLC vs S Corporation and Nevada Small Business Consulting is available to help you each step of the way. Contact us today at (702) 758-4691 to schedule a no-cost consultation!