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Thomas McJD
Thomas McJD, Attorney
Category: Business Law
Satisfied Customers: 6516
Experience:  Experienced in Corps, LLCs, Partnership, etc.
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I have started a business initially as a sole proprietorship. I

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I have started a business initially as a sole proprietorship.

I plan to move to a more formal corporate structure and need clarity on the following:

What are the advantages to incorporating under the following structures: Limited Liability Corporation (LLC), C Corporation or B Corporation considering the following factors?

Liability and legal protection of founders, officers, investors, employees
Simplicity to administer
State and Federal Taxes
Regulatory burden
Attraction to investors (e.g. angel or venture capital funding)
Attraction to customers (this may be subjective)

And how do those advantages change depending on what state in the United States you incorporate? (which states are more advantageous considering the factors above compared to other states)

Hello, I will be happy to assist you. After receiving your answer, and unless you have need for clarification, your accept (by clicking the green "accept" button) would be appreciated. Although you have made a deposit, I cannot receive credit for my work without your accept.

 

A "B" corporation is for a non-profit.

 

A "C" corporation is not good for small business because of double taxation.

 

An LLC generally is regarded as having a bit better asset protection due to charging order rules, but in CA if it is a single member LLC, courts have held that it really doesn't provide any different protection than a corporation.

 

The tax differences between a corporation and an LLC are none unless you take default taxation for a single member LLC, which is sole proprietor taxation. You could also elect for S corporation tax, which would likely be what you want (that's something to talk to an accountant about).

 

LLCs are also easier to maintain.

 

Really it doesn't matter where you incorporate or form your LLC although many websites claim otherwise. If you're doing business in CA why have an LLC somewhere else that you have to maintain plus maintaining a foreign LLC status in CA -- its just more work.

 

 

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