All throughout the month of October, we’ve been exploring LLCs vs Corporations at MyCorp – even more than we already do! The big question we keep revisiting are the LLCs vs Corporations themselves. Should a business become an LLC or corporation? Is there a “right” entity to form for your own business? We created an infographic that compares and contrasts the two together to find out.
By Greg Lindberg, 1800Accountant.com Writer
Decision-making is a huge part of being an entrepreneur and, eventually, a start-up business owner. One of the decisions you have to make during this often challenging process is to settle on a specific business entity to operate. An S corporation is one option you can go with. 1800Accountant.com, a partner of MyCorporation, recommends understanding the following information about how S corporations are structured and taxed before choosing to set one up.
The term “S corporation” originally took on its name from Subchapter S of Chapter 1 in the federal Internal Revenue Code. In general, an S corporation does not pay federal income taxes at the corporate level. However, this does not mean it is exempt from paying taxes altogether. The difference with this type of business entity is that it elects to have its profits, losses, deductions, credit, and all other activities passed through to the shareholders who are invested in the company. These shareholders must report this financial activity on their personal income tax returns.
On Tuesday, the National Federation of Independent Businesses (NFIB) released their small business optimism index report for August. Unfortunately, the Optimism Index dropped for the sixth consecutive month. This report suggests that American small business owners are very pessimistic and uncertain about the future. This doesn’t come as a surprise for many small business owners who have voiced concerns given the current economy.
The report also suggests that small business owners aren’t optimistic because they are facing low consumer demand coupled with new regulations from Washington. High taxation and an uncertain economy contribute to the pessimism. In order to combat the growing problem, the House Small Business Committee announced Tuesday a new interactive online forum, Small Biz Open Mic, that it says gives U.S. entrepreneurs a chance to speak directly with policy makers. The site is a blog-style media forum that invites small business owners to leave comments and share stories. Continue reading