In last week’s video, we discussed starting a new company and all of the entities that you have to choose from. This week, we are going to focus on limited liability companies (LLCs) and corporations.
Corporations are owned by shareholders. The shareholders elect a board of directors who make high level decisions. The board of directors also appoints officers who handle day-to-day operations of the corporation. LLCs are owned by members. The members can operate day-to-day operations; however, the members can nominate a manager to handle day-to-day operations.
Both corporations and LLCs can be treated identically for tax purposes. A so called “S-Corp” designation will result in the owners, whether shareholders or members, being taxed individually. This is often called “pass through” taxation. A “C-Corp” designation will result in the corporation being taxed as a separate entity. C-Corps are often used for a corporation that intends to seek financing or venture capital.
If you have any questions about starting a business, contact Stiles Law by calling (781) 319-1900.
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