TAXES: reasons why C corp is better than S or LLC

[newbuz]

hello,
just wanted to see what you think the reasons why a C corp are better than S or LLC.

thanks!

[vangogh]

I don't really have a good answer for you so I'm going to point you to a site by one of our members. It's all about LLCs (http://www.limitedliabilitycompanycenter.com/), but it also has some information comparing LLCs to S Corps and C Corps.

[newbuz]

seems like this is SEO trolling? that site is hastily put together, and I see no mention of C corp anywhere...

edit:well I guess your specialty is SEO - I've looked at your sites and you've succeeded in getting another hit :D.. Good info

[tallen]

This is the page you want on that site: LLC vs C Corporation vs S Corporation (http://www.limitedliabilitycompanycenter.com/llc_vs_corp.html)

From a tax standpoint (your original question), I think most people would agree that C-corps are probably NOT better than S-corps or LLC's. However if your business has more than the limit on the number of shareholders, or otherwise doesn't meet the requirements, then S-corp is out of consideration. So that leaves you LLC or C-corp as your options, and the question (besides taxes) becomes how easily do you want owners/members/shareholders to be able to leave or join the company, and how do you want the company to be managed and run.

[MWCC TC]

I much more prefer running my small businesses as S corps but it's just my personal opinion. And it also has to do with the amount of employees I take on ;)

[vangogh]

seems like this is SEO trolling

Yes, I trolled my own forum in order to recommend a site I have no affiliation with. In case you weren't sure, that was sarcasm.

The site is by one of the members here. He's not a web designer, but he is an attorney and I guarantee he knows more about LLCs, S Corps, C Corps, and any other corporate set up than you or I ever will. The site may not be pretty, but the information is very good.

[Business Attorney]

There are a couple of reasons that someone may want to use a C corporation.

The first is that if you are are small business that needs to regularly keep a portion of the profits in the business, the graduated rates for a C corporation may allow you to reinvest more money in the business after taxes. For example, if you keep $50,000 in this year's profits in a C corporation, you will pay a corporate income tax of $7,500 leaving you with $42,500. If you have a pass-through entity and are in the 35% bracket, you will pay $17,500 in taxes on the $50,000 leaving you with only $32,500 to plow back into the business.

Another potential reason is that if you plan to take investments in the future, some investors will only invest in C corporations. For some investors, the reason may be that they are retirement plans or other tax favored investment vehicles that would be hit with an Unrelated Business Taxable Income tax if they invested in an LLC and would disqualify an S corporation. For other investors (including some angel investors and many private equity funds), they don't want to be caught in a situation where they are reported to have taxable income from a pass-through entity and do not receive sufficient cash from the entity to cover the tax liability.

There are other reasons, too, but those are a start.

Sorry you don't like my site. Unfortunately, I have to spend most of my time practicing law, not polishing a website that provides free information for people who want to learn a little about LLCs.