Tax Benefits of Organizational Structure

Are there tax benefits to your organizational structure i.e. LLC, C-Corp, S-Corp?

There are different tax benefits associated with LLCs, S-corporations and C-corporations. An LLC is an entity that can choose to be taxed as a sole proprietorship, partnership if there is more than one member, S-corporation or a C-corporation. Single member LLC’s are disregarded for Federal and most State taxes and file using schedule C or schedule E on their personal return.

Partnerships and S-corporations file separate returns from their partners or shareholders but actually pass the income or losses through to the partner/shareholders personal returns.

C-corporations figure their tax separately on profits and losses before distributing dividends to their shareholders. This form of double taxation is usually avoided by small business owners by withdrawing all income as salary and bonus. The C-corporation is also allowed the most fringe benefits.