Ask a Business Lawyer. Get Business Law Questions Answered ASAP.
You can operate in any of these forms. A corporation can be a C corporation or an S corporation. An S corporation is like a sole proprietorship in that the income of the corporation is treated as that of its shareholders. A C corporation is a corporation that is taxed as a separate person under corporation tax rates. Depending on the amount of income, the corporate tax rates are generally higher than for individuals. Both forms of corporations provide limited liability, that means, unless you agree to personally guaranty something, the corporation alone is responsible for its debts not you individually. An LLC is a limited liability company and has the same lilmited liability as a corporation but is treated for tax purposes like a partnership. In some states, a limited liability company can have a single member and then it is treated like a sole proprietorship. A sole proprietorship is you operating individually in business. There is no limited liability like a corporation or limited liability company. Your taxes are reported on Schedule C on your personal tax return.
Most people prefer the benefits of limited liability. If you use a S corporation, you get the benefit of that and get taxed as though it was a sole proprietorship.
If this answer is responsive to your question, please accept it. That is how we are compensated. I would also be appreciated if you provided feed back on your view of the answer. Finally, if the answer was especially helpful you can provide a bonus. If I can be of further assistance or you have other questions in the future you can ask for me and reach me at this site.
This communication is not intended as legal advice. A local attorney should always be consulted for legal advice. No client/attorney relationship is intended or created by this communication.
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).