Comparing Business Entity Types
This video compares the following business entity types:
1. Sole proprietorship
2. Partnership
3. S corporation
4. C corporation
5. LLC
A sole proprietorship is easy to form and allows the owner to deduct losses of the business. However, the owner is personally liable for debts of the business and is subject to self-employment tax on the business's income.
A partnership is also easy to form and allows the owners (partners) to deduct losses of the business. A partnership also allows partners to make special allocations of income and deductions, and a partnership is flexible in that virtually anyone (including a C corporation) can be a partner. However, guaranteed payments and the share of partnership income are subject to self-employment tax, and partners are liable for the partnership's debts (unless they are a limited partner or it is an LLP).
An S corporation provides limited liability for its owners (shareholders) and is the best entity choice for reducing self-employment tax. Shareholders may also deduct their pro rata share of the business's losses. There are multiple restrictions for S corporations, however. An S corporation can have a maximum of 100 shareholders, and no shareholders can be a C corporation, a partnership, or a nonresident alien. Moreover, an S corporation can only have one class of stock.
A C corporation also provides limited liability for its owners (shareholders), but can have an unlimited number of shareholders of any type. Shareholders, however, cannot deduct the losses of the business. Worst of all, a C corporation is subject to double taxation.
An LLC combines the limited liability of a corporation with the ability to be taxed as a partnership (or a sole proprietorship, if it is a single-member LLC). However, LLCs have only been around since 1977 so the tax law surrounding certain types of transactions is not entirely clear.-
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Пікірлер: 12
A great video (series?) to make would be How to Start a Small Business in the US.
Thank you so much for explaining this!
@Edspira
2 жыл бұрын
Glad it was helpful!
Excellent overview.
An awesome video, thank you so much, Question please I would like to create my business as LLC and pay myself as S-Corp via W@. how can I do that? Thank you
@yoyoclockEbay
Жыл бұрын
You have to fill out form 1392d-15b and then say the last three digits of PI.
What impact can a legal enity have on a organisation
Thanks
@Edspira
Жыл бұрын
You're welcome!
11:47 Only 1977? That's a while.
You move too fast , please try to slow down when explaining on the next video
FIRST