Both entities offer you protection from personal liability. In an L.L.C. the members or managers are not personally liable for the debts of the L.L.C.
Likewise, an a C-Corporation, the shareholders are not normally liable for the debts of the corporation.
However, in either case, this liability shield may be pierced if a member/manager or shareholder takes an action that is particularily egregious.
Typically, L.C.C.'s are taxed less than corporations. A single member L.L.C. is taxed as a sole proprietorship. That is, the profits of the L.L.C. are taxed once and at the individual's tax bracket rate. A multiple member L.L.C. are taxed like partnerships. L.L.C.s may choose to be taxed like corporations but this is typically only done in unqiue sitatuations.
A C-Corporation is subject to double taxation. That is, when a corporation makes profit, it must pay taxes at the corporation's tax bracket rate. These rates are typically better than individual's rates. However, when the income is then dispursed to the shareholders, they must pay taxes on this income at their rates. Whereas corporations often recieve certain tax benefits for their employees and certain deductions, most business do not welcome the opportunity to pay taxes twice.
L.L.C.'s can be member-managed, where all the owners make the decisions, or manager-managed, where an appointed manager makes all the decisions. The majority of L.L.C.'s are managed by the people who set them up. This makes for a very simple and straight-forward management structure.
C-Corporations, on the other hand, are a bit more complex. Typically, the shareholders elect a board of directors which in turn elects the officers of the corporation.
L.L.C.'s are not set up to raise a large amount of capital and are not typically public companies.
C-Corporations are often public companies and are set up to raise a large amount of capital by selling shares.
L.L.C.'s and C-Corporations have many similarities including losses being passed through (with limitations on capital gaines), transferability of interests and duration.
If you have any questions regarding the differences between an L.L.C. and a C-Corporation, please give me a call!
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