corporation, llc, llp

Should I Form An LLC Or A Corporation?

Every individual going into business will ask themselves if they should form a limited liability company or a corporation. There are many reasons to consider one or the other. The best thing you can do is contact a licensed Las Vegas attorney that specializes in the setup and planning of both LLC’s and corporations. Having good information on the subject is also important. Continue reading as we compare and contrast the two business types for you.

One of the leading reasons people set up either a corporation or an LLC is to limit their liability should the business be sued or go into bankruptcy. Both types of business entities are covered by laws that protect their owner or owners. If you’re business is failing the creditors will not be able to go after your personal assets such as your house or retirement account.

There are a lot of differences between corporation and partnerships. Right from the start there is the issue of how much money is required to setup both entities. A corporation is much more expensive to create. It is also more expensive to maintain as yearly fees paid to the state are often higher than they would be for an LLC or an LLP.

With a partnership you can escape many of the formalities associated with a corporation. With a corporation detailed minutes of shareholder and director meetings must be kept. There is also the fact that these parties must meet regularly at minimum intervals. Partnerships do not have any of these formalities to keep up with.

Another difference is in the types of taxes required by both entities. A corporation’s shareholders and employees must pay unemployment taxes on their salaries. Partnerships do not have this requirement. However, partnerships must pay self-employment taxes while corporate profits are not taxes in this way and have a lower corporate tax rate.

It is because of this difference in tax rates that many business owners chose the corporate model when setting up a business. By keeping a certain amount of the corporations profits inside the business you can dramatically reduce your overall taxes. Also, in leaving some of the profits in the corporation you may also lower your personal tax bracket. Another added bonus of having a Nevada corporation.

Having a corporation instead of an LLC can make it much easier to find funding and receive loans. Most investors are familiar with buying stakes in corporations. When investing in a corporation there is the added bonus that it will continue even in the event of a shareholders death. With an LLC this is not possible and all assets, permits and licenses held by the LLC must be transferred to any new business individually. With a corporation these kinds of assets are transferred with the business as a whole making it much easier for investors.

With an LLC you can include your business in a living trust. S corporation shares are difficult to include in a living trust. S corporations also cannot have more than 100 shareholders. Shareholders must also be a U.S. citizen.

An LLC had the option of being treated like a corporation for tax purposes.

Be sure to consult with an attorney that is well versed in business planning to assist you in choosing the right business entity for your needs. Also look for an attorney with experience in handling corporate litigation. This can save you from going through many hassles later on.

llc, llp

Creating An LLP vs. An LLC

As your business grows it is wise to begin looking into forming some kind of Limited Liability Company (LLC) or a corporation in order to protect you and any partners you may have from the company and its liabilities. In most cases this can also work to protect the company from the personal problems of you and your partners. But which type of partnership is right for your business? We will look into two types of partnerships. One is an LLC and the other is a Limited Liability Partnership (LLP).

First let’s look at the main differences between the two. A Las Vegas LLP is restricted to certain kinds of licensed professionals. These include doctors, lawyers and accountants, though other licensed professions can also form an LLP. Another way to reference an LLP is as a Professional Limited Liability Partnership or PLLP.

By forming an LLP each partner is protected from the debts and liabilities owed by their partners. However, the protection offered by an LLP is often less comprehensive than that offered by  an LLC. Typically an LLP is formed when state laws prohibit the partners from being able to form an LLC or a corporation.

Both forms of partnership are created by filling papers with the state and paying a filling fee. Both also require yearly registration fees.

Both partnerships don’t require extra tax filings as they are both use the pass through taxation method. Profits and losses will be recorded on the partners personal income tax forms.

Some key differences between the two are that an LLP is required to carry certain types of insurance and it is typically difficult to generate outside investment for the partnership with an LLP. Also, selling a piece of an LLP, or as a whole, can be difficult because of the partners involved.

When you are ready to begin the process of creating your own LLC or LLP in Las Vegas be sure to work with a Las Vegas LLC attorney that specializes in corporate law. You don’t want to go it alone when you are making some of the most important and far reaching decisions of your life. To get more detailed information on this topic please read our guide on maintaining your Nevada limited liability company.