P.N.F. Shares The Pros and Cons of Setting Up a C-Corp vs S-Corp vs LLC

EAST BRUNSWICK, N.J. - March 4, 2016 - PRLog -- The type of legal structure a company chooses will have a great impact on the amount of taxes a company must pay and the personal liability it will face. Pishoy Fahmi CPA, owner of P.N.F. Certified Public Accountants & Healthcare Advisors, shares the pros and cons of setting up a C-Corp, S-Corp and LLC:

S-Corporation

Pros:

Choosing the S-Corp for a company offers tax perks. Business owners who choose this option avoid double taxation on gains. With an S-Corp, a company's losses and gains avoid taxation at the corporate level. In addition, it gets reported on each shareholder's income tax return.

Cons:

The company is allowed to issue only one class of stock.  A company is not allowed to have more than 100 shareholders. All shareholders must be permanent residents of the U.S. or citizens.

C-Corporation

Pros:

C-Corporations receive a lower tax rate. Companies can split losses and profits between the owners and business to create a lower tax rate. Unlike the S-Corp, a C-Corp can have an unlimited amount of sharehholders. Employers can offer their employees a stock option plan. Plus, sharehholders and owners cannot be held liable for any law suits or debts of the corporation.

Cons:

Owners experience double taxation on the company's earnings. Additionally, shareholders are obligated to pay taxes on dividends. Owners can escape taxes on earnings, if they take a salary, because it will be considered an expense.

Limited Liability Company (LLC)

Pros:

A member's portion of the bottom-line profit is not earned income. As a result, they are not subject to self-employment tax. With an LLC, there is no limit to the number of members.

Cons:

If an LLC has only one owner, the company will be taxed as a sole proprietorship.

Pishoy Fahmi advises business owners to consult with a certified public accountant prior to making a final decision on the type of legal structure they choose for a business. For further information about Pishoy’s accounting services, visit his website at: http://www.pnfcpa.com or call (732) 605-1529.

About P.N.F. Certified Public Accountants & Healthcare Advisors

P.N.F. provides business accounting services for health professionals in New Jersey, New York, Connecticut and across the East Coast.