Nevada Corporation or LLC – Your Choice

The differences are corporations issue stock and are owned by shareholders while LLC’s do not issue stock and are owned by members.

LLC’s provide greater management flexibility than do corporations. Corporations are required to have a formal structure with directors and officers. LLC’s are simply run by their members and/or managers. LLC’s provide greater flexibility with regard to income distribution than do corporations. When corporations pay dividends, those profits must be distributed evenly on a dollar per share basis. LLCs may distribute income as desired if a small business is interested in “pass-through” taxation, then LLC’s have an advantage over S Corporations in terms of ownership flexibility. All shareholders of S Corporations must be citizens or permanent residents of the United States and there may be no more than 100 shareholders in total. It is easier to switch from an LLC to a Corporation, than from Corporation to a LLC. If your company incurs any losses in the first year(s), you may write them off of your personal income tax return. When you start to see a profit, you can incorporate and take advantage of the low tax rates afforded to a Corporation. Corporations are required to hold annual meetings and to keep written minutes. LLC’s do not have this requirement, although they should keep an up-to-date Operating Agreement from inception.

Corporations are taxable entities, and (except for Subchapter S Corporations) they must pay taxes on their profits at the corporate tax rate. LLC’s, like sole proprietors, partnerships and S Corporations, are “pass-through” tax entities. This means that the profit or loss generated by the business is reflected on the personal income tax return of the owners, thus avoiding the double taxation of paying first corporate tax on profits and then personal income tax on distributions of profits. Both the corporation and the LLC offer the same asset protection.