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Terms in this set (4)
C Corp
Constitutes a legal and taxable entity separate from the owners who are shareholders in the corporation.
Benefits:
1. Provides a limited liability for the obligations
of the corporation.
2. Ownership and control are separate. This
allows for managerial expertise to resolve
problems.
Ex. Microsoft
Benefits:
1. Provides a limited liability for the obligations
of the corporation.
2. Ownership and control are separate. This
allows for managerial expertise to resolve
problems.
Ex. Microsoft
S Corp
Same as C corp except that it is a separate legal entity but not a separate taxable entity (avoids double taxation).
Benefits: Same as c corp but no income taxes.
Benefits: Same as c corp but no income taxes.
Limited Liability Company (LLC)
Hybrid ownership structure that combines the corporate characteristics of limited liability for the owners with the tax characteristics of a partnership.
Benefits:
1. Greater flexibility than S corp in terms of the
number of owners, typer of owners, and
capital structure.
2. Permit all owners to participate in
management.
3. Cheaper and esaier to set up and run than C
or S corp.
Benefits:
1. Greater flexibility than S corp in terms of the
number of owners, typer of owners, and
capital structure.
2. Permit all owners to participate in
management.
3. Cheaper and esaier to set up and run than C
or S corp.
How to create an LLC
To create LLC, the "managing member" files articles of organization with the state on behalf of all members. They also create the "operating agreement" that explains the operation and management of the LLC.