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DISCUSSION-

When to form an LLC (Limited Liability Company) (Links to an external site.)Links to an external site.  discusses why the LLC is one of the most popular types of business  entity.  After reading the article and Chapter 30 of the textbook,  compare an LLC with a C corporation and with an S corporation.  If you  were operating your own business, would you choose the LLC as the  organizational form for your business?  Explain your reasoning.

Guided Response: Respond to at least two of your  fellow students’ posts in a substantive manner. Some ways to do this  include the following, though you may choose a different approach,  providing your response is substantive:

Address students who made the same choice that you did regarding  whether to choose the LLC as the organizational form for their  business.  Using the information from the course textbook and the  article, play the role of devil’s advocate and argue why some other type  of entity (C corporation, S corporation, or LLC) would be a better  choice.

EDWARDS DISCUSSION REPLY TO THIS:

 

The limited liability company is for large corporations, especially  if they have multiple owners. It can be less of a headache if large  corporations were to use a LLC to file their taxes because they only  have to file a few forms. With the S and C corporations, they have to do  more bookkeeping regarding their profits and deductions. S corporations  are for small businesses that must not “have more than 100 shareholders  or a nonresident alien as a shareholder and not have more than one  class of stock” (Seaquist, 2012, p. 30.2). The c corporation on the  other hand does not have a restriction on how many shareholders they  have, and they do not have to be in the United States.

One thing that all these business entities have in common is that  they all have limited liability, which “means that you can generally  protect your personal assets if there is litigation or bankruptcy of  your company” (Taulli, 2016). This is the most important aspect to have  when a company is getting sued for a substantial amount of money because  they do not have to worry about losing their homes, cars, savings, etc.  When first getting a business of the ground, it can be difficult to  gain a large amount of profit after paying for deductions which includes  wages, insurance, products and taxes. “The greatest disadvantage of  organizing a business as a corporation is the double taxation to which  corporate profits are subject.” (Seaquist, 2012, p. 30.2). Having to pay  taxes on a corporate and personal level can cause an organization to go  out of business due to the fact they will probably have to use all of  their profits to pay their taxes, which is why I would use a s  corporation, because of the tax breaks and not having to answer to  anyone.

References

Seaquist, G. (2012). Business law for managers. Retrieved from https://content.ashford.edu/

Taulli, T. (2016, Jul. 24). When to form an LLC. Forbes. Retrieved from https://www.forbes.com/sites/tomtaulli/2016/07/24/when-to-form-an-llc-limited-liability-company/#fea454e4e0d9 (Links to an external site.)

KARENS DISCUSSION REPLY TO THIS:

 

Formation of Limited Liability Company (LLC) is considered to be  valuable for small sized or a medium sized partnership firms or sole  proprietorship firms. The major benefit involved in case of LLC is that  the liability of such companies is limited and the complexity involved  in LLC is much lesser, when compared to other firms. Secondly, the cost  involved in these firms are very low(IT, 2017). These are one of the few  reasons, why it is preferred in business entities.  A distinct  characteristic of LLC is that, it does not indulge into double taxation  which is similar in comparison to C corporation.

The LLC and S corporation hold many similarities like in terms of  protection provided to the owners or shareholders. Secondly, the state  requirements are also similar. Both them follow the concept of pass  through taxation(IT, 2017). The only difference is that it is mandatory  for S corporation to file its tax return but in case of LLC, they need  to file their returns only if the number of owner is greater than one.

The main difference between LLC and S corporation while LLC can have  innumerable number of shareholders but for S corporation, the maximum  number cannot be greater than hundred.

The ways of offering limited liability is different for LLC and C  corporation. In case of C corporations, the filling for incorporation  must be done at state level itself. They are effected by double taxation  as first the income is taxed at the entity level and next when they  pass through the shareholders. The C corporation follow formal system of  management.

I would definitely like to choose LLC as the organizational form of  business because it involves low complexities and cost and at the same  time provides protection in the form of limited liability and is also  convenient for sole proprietorship form of business.

References

IT, S. (2017). S Corporation: What Is An S Corp? | incorporate.comIncorporate.com. Retrieved 21 November 2017, from https://www.incorporate.com/s_corporation.html

IT, S. (2017). What is an LLC? Form a Limited Liability Company | incorporate.comIncorporate.com. Retrieved 21 November 2017, from https://www.incorporate.com/limited_liability_company.html