Mark Glendon

S-Corp vs. C-Corp

When someone starts a business, there's often a need to form a legal entity that represents the interests of the business outside of those of the owner. Although you can go into business for yourself as a sole proprietor, doing so can limit your ability to deal with financial institutions and other businesses as a business entity.

Likewise, your tax liability may be personal as a sole proprietor. By forming an S-corp or a C-corp, your liabilities shift away from your finances and toward those of the business entity you create.

What is an S-Corp?

One of the defining characteristics of an S-corp is its structure when it comes to shareholder interaction. S-corp companies can pass along income as well as debts to shareholders as long as these values are taxable. Do you want to know what is an S-corp? Visit this website.

What is a C-Corp?

Although "what is an S-corp?" is one of the most popular questions asked among budding entrepreneurs, understanding how a C-corp operates is also important. A C-corp is similar to an S-corp in that the business is a separate entity on its own, but with a C-corp, the business is taxed as its entity.

Which Option is Best?

Deciding between an S-corp and a C-corp can come down to what your business goals are and how you plan to expand and grow as a business. If you plan to leverage shareholder investments, an S-corp may be more advantageous. If you plan to maintain majority control over a business, a C-corp may be a better idea. There are also limited liability corporation (LLC) options that don't involve shareholders but do separate a business' financial dealings from those of the owner.

To determine which option is right for you, it is recommended to work directly with a tax advisor. These professionals can evaluate your current situation along with your goals to provide you with insight into which option will provide the most benefits. You may also want to work with a business planner or business coach who can help you perform a full cost-benefit analysis of the different options available.

Author Resource:-

Mark writes often about estate planning. His articles may include topics like real estate closing attorney and business succession laws to help the people in needs. You can find his thoughts at elder law blog.