Re: LLC or Corporation?

Generally, the best answer for your situation depends on how much 
liability you personally want to assume.  The purpose of the LLC is to 
limit your liability to the amount of money you invest - but you'll have 
more liability with an LLC than with a corporation.  Some states 
*require* a LLC to be used for some professions, such as legal firms.

Corporations limit liability to the company itself (it's treated as a 
person), but can have a lot more overhead involved administratively due 
to tax returns, stock transfers/sales, etc . . . You also have to make 
yourself an employee and do the extra payroll accounting associated with 
your own paycheck.  With a LLC the profit from the company carries 
through as income like in a sole proprietorship or partnership.

Double taxation is largely a myth, however.  Corporations are taxed just 
like people - only on the profit they make.  Wages, costs of doing 
business, and other expenses are non-taxable income in most cases.  Many 
people speak of "double taxation" when they refer to the taxes applied 
to wages.  Each dollar going to wages is actually only taxed once 
(federal wage taxes) - it's not taxed as income to the corporation and 
then again as income to the employee.

In fact the tax rate for corporations is more or less a "fixed 
percentage" of the profit.

Richard Schilling, MBA



-=Almazick=- wrote:
> We are buying a small Gyros restaurant in Chicago, IL.  I have to set up the
> company and can't decide between LLC and Corporation.  I was told that there
> is a double taxation for corporation and for LLC we have to make an Annual
> report which cost $250.  Which one will better suit me and be cheaper and
> easier to make LLC or Corporation?
>