What are the differences/advantages to: A Partnership, An LLC, A Corp., An Inc.?

Question

Is there a website or other web resource that explains this better?
Specifically in reference to a Real Estate Company.

Answer 1

The question depends on a number of factors.

A sole proprietorship has the least amount of expense and headaches to setup and operate, but the also the least amount of liability protection. If you go bankrupt as a SP you must declare personal bankruptcy. Income and losses are taxed to you personally and also completely subject to Self Employment tax of 15%.

A partnership is similar to a SP except it has more than one owner. In addition, you are personally liable for your partners actions and any and all liabilities of the partnership and vice versa.

An LLC offers liability protection and is an organization that is more difficult to set up and operate than an SP but less than a Corporation. Income is taxed on your personal tax return as a "pass through". These taxes may be higher if you have income right away, but if you have losses they are deductible against ordinary income on your tax return. Self employment tax is due on your salary, but not necessarily on company profits.

An S- corporation has the same tax status as an LLC but is more complicated to setup and operate. If offers liability protections.

A C-Corp is the most complicated to setup and operate, but income is taxed at the corporate rates which can be less than the personal rates. If you sell assets from a C -Corp and then want the money for yourself, it will be taxed twice - once in the corp and once personally. But if you sell the entire business, you get the lowest possible tax rate, capital gains tax, currently 15%.

In short if you will have early losses and need liability protection do an LLC. If you will have a substantial business with lots of profits especially early on, do a regular C Corp. If you're dabbling here and have no real expectation of a meaningful business - do a Sole Proprietorship.

Good Luck
Dana B.

Answer 2

A partnership has no double taxation, you are personally liable for any lawsuits and debt to the point your house and vehicle are on the line along with your credit, it is the easiest to form.

A corparation is heavily regulated, you are taxed on your salary, and stock holdings, ( double taxation), is the most expensive to form, your personal wealth is protected, you are not sued if something goes wrong, the business is liable. You have a CEO, CFO, and other positions that must be filled, and detailed recording of meetings ( minutes) is required.

A LLC is around 500-1000 to form, it gives the best benefits, for example; it gives the owners protection from lawsuits as the Corparation, owners are not double taxed, and is the best of both worlds, it does have more paperwork than the partnership, costs a little more than the partnership. The LLC is responsible for its own credit, debt and other risk.

Answer 3

LLC with S-Corp feels like the your best option greater healthful. the only benefit I see with the Corp with scorp status is interior the criminal accountability section. LLC is comparatively new organisation entity in assessment to corp. So if positioned decrease than criminal tension, the corp has greater background of criminal accountability protection than LLC. i might ask an Asset protection criminal expert no longer a tax criminal expert on your suited attitude seeing your organisation has severe criminal accountability exposure.