Corporations come in several forms, and make no mistake – there IS a difference. Avoid making a costly mistake by engaging the incorporation and new business advisor services offered by Long Island CPA firm James Castaldo CPA & Associates. Contact us at 631-302-1945 to set up a free initial consultation. We’ll explain your options in detail.
A Limited Liability Partnership has two types of partners – general and limited. General partners have management authority for the business, and they also have personal liability for the company’s obligations. Limited partners are those who invest in the company, but have no management authority and no personal liability except for the amount of their own investment. An LLP is often formed with a C or S corporation as the general partner, and it is not a separate tax-paying entity.
The owners or members of an LLC have no personal liability for the firm’s financial obligations, but the company may be taxed as a partnership, so the members are required to report their income and deductions on their personal tax returns. Several legal documents are required to form an LLC, including an organizational agreement and articles of organization that are filed with the Secretary of State.
The owners or shareholders of a C corporation have no personal liability for its obligations, but the company itself is taxed and shareholders are taxed on any dividends or distributions they receive.
An S corporation is similar to a C corporation in many ways, but the company itself does not pay taxes, although shareholders must report income from the business on their personal tax returns.