Understanding the Differences: C-Corporation, S-Corporation, and LLC

🏢C-Corporations are separate legal entities that are subject to double taxation but offer limited liability protection.

👥S-Corporations pass the tax down to the shareholders, allowing them to avoid self-employment tax.

💼LLCs are flexible entities that allow you to choose how you want to be taxed, providing personal liability protection.

💰Choosing the right entity depends on your specific circumstances, including your income, the need for loans, and growth goals.

📈Consider both tax implications and business growth potential when making entity selection decisions.

What are the advantages of a C-Corporation?

—C-Corporations offer limited liability protection and allow for raising capital through the sale of stock.

How do S-Corporations help avoid self-employment tax?

—S-Corporations pass the tax down to the shareholders, allowing them to avoid paying self-employment tax on profits.

Can an LLC choose how it wants to be taxed?

—Yes, an LLC can choose to be taxed as a C-Corporation, S-Corporation, partnership, or disregarded entity.

Which entity is best for someone looking to build a real estate portfolio?

—The choice depends on various factors, including the need to borrow money, personal liability protection, and tax implications.

How can I determine the right entity for my business?

—Consider your specific circumstances, such as income, growth goals, need for loans, and the desire for liability protection. Consult with a knowledgeable professional for personalized advice.

00:07This video explores the differences between C-Corporation, S-Corporation, and LLC.

00:23C-Corporations are separate legal entities subject to double taxation.

01:43S-Corporations pass the tax down to shareholders, allowing them to avoid self-employment tax.

02:54LLCs provide flexibility in choosing how to be taxed and offer personal liability protection.

03:46Choosing the right entity depends on factors like income, growth goals, and need for loans.