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Updated: Feb 9, 2020

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When starting the journey into entrepreneurship you must first determine want business formation works for you. All these entities offer some form of limited liability.

LLCs ( Limited Liability Corporation)

LLCs are a popular choice if you want an entity to hold real estate or other appreciating assets, and they are a popular choice for entrepreneurs because of the flexible taxation and asset protection. As an LLC owner, you can also choose to be taxed as a C corporation or an S corporation, however, LLC owners don’t have to file a corporate tax return.


C Corporations are great if your proposed business intends to sell products, have a physical location and employees. If your business offers services the taxes of a C Corp may be too high. C Corporations are subject to double taxation, meaning your business pays taxes and you pay taxes.

S CORPORATIONS ( Sub-chapter S)

S Corporations are a good choice if you would like the protection and structure of a regular corporation, they are great if your business may have significant start-up costs. To incorporate an S corp you must be a U.S. citizen or a legal permanent U.S. resident.

And, as an S Corp, you are limited to 100 shareholders. To be considered as an S Corporation you must first set up a C corporation or LLC and elect to be taxed as such by submitting IRS form 2553.

Before deciding on which business formation works for you be sure you carefully evaluate the pros and cons and seek advice from a lawyer or accountant.

Good Luck!

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