2007-03-10 23:11:31 · 3 answers · asked by crisco 1 in Business & Finance ➔ Corporations
Crisco,
The previous two answers are wrong. Here are the different types of company organizations:
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%.
An LLC, or Limited Liability Company, is an option that 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. SET 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%.
A partnership is an company that does not file organization documents with state and as such has no liability protection. It has more than one owner or "partner". This is usually not desirable form to operate a business.
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 - President
2007-03-11 15:00:43 · answer #1 · answered by planningresult 4 · 0⤊ 0⤋
A limited company is one with public listed sharehoders . A partnership company is one with several partners who own all stock in their company
2007-03-11 07:19:27 · answer #2 · answered by burning brightly 7 · 0⤊ 1⤋
Iimited is owned by one Person
and the other is owned by 2
2007-03-11 07:14:44 · answer #3 · answered by Anonymous · 1⤊ 2⤋