There are several advantages to forming a legal entity for your business. Benefits of forming a C Corporation, an S Corporation, or a Limited Liability Company (LLC) include the following:

  1. It Provides Protection for your Personal Assets. Forming a corporation or an LLC allows the business owner to separate and protect her/his personal assets in case someone brings a lawsuit or claims against the business entity. In other words, your business will be sued instead of you personally.
  2. Greater Credibility. Adding an “Inc.” or “LLC” after your business name is a stamp of approval and gives your business instant credibility and authority associated with owning an incorporated company. Many consumers, vendors, and partners may prefer to do business with an incorporated company and will overlook those who are not.
  3. Brand Protection. Other businesses cannot file to use your exact corporate or LLC name in the same state. Thus, it strengthens your business in terms of brand identity and marketing efforts.
  4. Perpetual Existence. Corporations and LLCs continue to exist throughout ownership or management changes within your business. Sole proprietorships and partnerships end if an owner dies or leaves the business. You can sell your business without ending the legacy of your business.
  5. Tax Flexibility/Benefits. A corporation can avoid double taxation by electing Subchapter S tax status. LLCs can choose to “pass-through” taxation or to be taxed as a corporation.
  6. Deductible Expenses. Corporations and LLCs may deduct normal business expenses, including salaries, before they allocate income to owners. Thus, the money you put towards growing your business can be deducted from your business income in determining your actual taxable income.

So, what is the difference between C Corporations, S Corporations, and Limited Liability Companies and which entity should you choose? View the differences in our Choice of Entity Chart or just give me a call to help you decide which is right for you.