Why choose a C-Corporation?
When managed properly, a C-Corporation has the following benefits:

• The owners of a C-Corp are limited in their personal liability for business conducted by the corporation, including but not limited to debts which may be incurred by the corporation.
• With a C-Corporation, there is no limit on the number of owners or shareholders.
• Corporations can raise funds through the sale of stock.
• One does not need to be a United States Citizen to own stock in a C-Corporation.
• As opposed to an S-Corporation or an LLC, which we will explore below, C-Corporations can deduct the cost of certain benefits, such as an owner's health care benefits, as business expenses.

S-Corporation
A "subchapter S" Corporation, also known as an S-Corporation, is a corporation that elects a special tax status through the IRS. The Subchapter S Corporation's tax election enables the owners of the corporation to "pass through" the profits of the corporation directly to their personal tax returns, thus avoiding the "double taxation" problem which many C-Corporations face. A small business corporation becomes eligible to be treated as an S-Corporation by filing an election with the Internal Revenue Service, Form 2553.

For example, a C-Corp must pay corporate taxes on its profits. After the corporation pays its own taxes, it may distribute the remaining funds as dividends to its owners, but the owners must then pay personal taxes on that income - a situation commonly known as "double taxation." With an S-Corporation, however, the corporation's profits "flow through" to the personal tax returns of its owners - the income is taxed only once, a tremendous benefit of an S-Corporation rather than a C-Corporation. It is important to note, however, that if the owners of an S-Corporation are working for the corporation, then the corporation must pay them a salary that is considered "reasonable compensation," and must pay Social Security/payroll taxes on that salaried "reasonable compensation."

Why choose an S-Corporation?
When managed properly, an S-Corporation has the following benefits:

• Similar to a C-Corporation, owners of an S-Corporation have limited personal liability for business conducted by the corporation, including debts incurred by the corporation.
• With an S-Corporation, there is no double taxation threat because the corporation is not a separate taxable entity.
• Owners of an S-Corporation can save on employment taxes by taking distributions instead of salary, but must pay themselves a "reasonable compensation."

Limited Liability Company (LLC)
A limited liability company (note the distinction: it is a "company" rather than "corporation") is a business structure that combines aspects of a partnership and a corporation. Essentially, it provides the limited liability features of a corporation along with the tax benefits and operational flexibility of a partnership. Like a corporation, an LLC is a distinct and separate legal entity created by a state filing. Great care is needed when structuring an LLC to ensure pass-through tax treatment and strict compliance with all applicable law. When properly maintained, it will shield an owner's personal assets from business liabilities, and will be among the easiest forms of corporate ownership.

Why choose an LLC?
When managed properly, an LLC has the following benefits:

• An LLC is less formal and more flexible than a typical corporation, yet offers similar protection from liability for business debts.
• For tax purposes, the owners of an LLC do not need to allocate profits and losses in a way that is proportional to their ownership interests.
• LLC owners do not face the problem of double taxation since the LLC is not a separate taxable entity.