Corporation Vs LLC
When you plan to start a business with your own or partners and decide to register the company legally in the country of your choice, you may have to make many important decisions that are important decisions you make One of them is that the structure of the company you are building is the real benefit of choosing a structure that you have Do not want to be the most suitable. For this, you need to know the accepted type of business types included and the responsibilities and rules associated with it under the Companies Act.
There are some important factors in choosing the right business structure, in the same way that tax business, legal liability, your assets security and operating costs apply.
A limited liability company (LLC) is a unit, whose proprietorship enjoy limited liability (liability / responsibility) for the company's debt and losses. In most cases, owners' liability is limited to the face value of fully paid shares. It provides owners with the
protection of their personal property from commercial loans. Members can not be individually liable for the loan, unless they sign a personal guarantee.
In the combination of many features of LLC Corporation and partnership structures is a type of business, but not a corporation or partnership. Owners are called members, shareholders or partners are not, and the number of members is unlimited. Anyone can be a member of LLC; Individuals, corporations or other LLCs can also be its members.
A corporation is a formal trade union with a publicly registered charter, which is recognized as a separate legal entity, which has its privileges, and has liabilities different from its shareholders.
A corporation enjoys more rights and responsibilities that a person possesses, a corporation has the right to contract, loan and borrow, prosecute and prosecute, hire employees, pay their property and taxes is.
There may be an unlimited number of shareholders in a general corporation. The most important aspect of a corporation is that its shareholders are not personally liable for participation in profits, through dividends and / or appreciation of shares, but for company liabilities. A shareholder's personal liability is usually limited to the amount invested in the corporation.
In both corporation and LLC, the liability of the member / shareholder is limited to business loans and they are protected against lawsuits against the business. But the tax system is different from each other
Based on the share of membership in the LLC, the benefits and losses of the business pass through the members. Then members have paid tax on their personal tax return on the basis of adjusted gross income of the owners. Where corporation corporations have different legal entities, the profits and losses of the corporation are taxable for the corporation at corporate rate, not the owner / shareholder.
The board of directors is appointed in the corporation and they oversee the business. In LLC the members fixed an operating agreement and followed that agreement.
In essence, a corporation is a legal entity that is different from its owners. The owner / shareholder is secured with the corporation's liabilities, and the corporation pays the income tax at the corporate rate with the board of directors to decide. Whereas a limited liability company (LLC) is formed by one or more members, whose liabilities are limited to their investment. An LLC is often used in place of partnership to limit liability. Tax is paid through the personal tax return of the adjusted gross income of the individual member.