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Compliance with AML (Anti-Money Laundering) rules is mandatory in the United States for banks, currency exchanges, casinos, real estate brokers and money services businesses. Here
Questions? Book an appointment today. +1 (305) 647-3000 EIN for corporations: when do you need one? Everything in this post concerns US regulations, and every
Sole proprietorship EIN: when a one-owner business needs one Sole proprietorship Definition A sole proprietorship is an unincorporated business owned by one person. It is
What a corporation is in the United States: legal definition, shareholder limited liability, shares, board of directors and how it differs from an LLC.
A limited liability company (LLC) is a type of business entity that combines the personal liability protection of a corporation with the tax benefits and simplicity of a sole proprietorship. Below are the main advantages and disadvantages of a corporation compared with a limited liability company.
Corporate profits are not subject to Medicare and Social Security taxes: As with a sole proprietorship, an LLC’s wages and profits are subject to self-employment tax, currently 15.3% (12.4% Social Security and 2.9% Medicare, according to the IRS), unless the LLC elects to be taxed as a corporation. With a corporation, only salaries (not profits) are subject to those taxes.
Corporations can offer more benefits with less tax: Corporations offer a wider range of fringe benefit plans than any other business entity, such as retirement plans, stock options and employee stock purchase plans. In addition, sole owners, partners and employees who own more than 2% of an S corporation must pay tax on some benefits (life insurance, medical reimbursement plans, health insurance premiums and parking), while shareholders and employees of a C corporation do not pay tax on these benefits.
Corporations can lower taxes by shifting income: Although C corporations are subject to double taxation, a C corporation can shift income to take advantage of lower income tax brackets.
A limited liability company (LLC) has fewer corporate formalities: Corporations must hold regular board and shareholder meetings and keep corporate minutes. LLC members and managers do not need to hold regular meetings, which means less hassle and less paperwork.
A limited liability company (LLC) has no ownership restrictions: S corporations cannot have more than 100 shareholders, and each shareholder must be an individual who is a US resident or citizen. These restrictions do not apply to a limited liability company (LLC) or to C corporations.
A limited liability company (LLC) can deduct operating losses: Members who actively participate in an LLC or S corporation can deduct operating losses against their regular income to the extent the law allows; shareholders of a C corporation cannot.
A limited liability company (LLC) has tax flexibility: LLCs are treated as “pass-through” entities for tax purposes, just like a sole proprietorship. However, an LLC can also elect to be taxed as a C or S corporation. If you are about to do business with an existing corporation or LLC, you can check the state registry to confirm it exists and see who manages it.
