احمدمحمدحمدي
02-16-2020, 02:58 AM
What it is: Limited Liability Companies are a type of business structure that is more complex than ownership and individual partnerships, but less complex than companies. They are called 'passing entities' because they are not subject to a separate level of tax. Most countries do not restrict ownership of limited liability companies, so members can include individuals, companies, and even limited liability companies and other foreign entities. Most countries also allow 'one-member' limited liability enterprises, which only have one owner.
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Pros: As the name implies, the owners of a limited liability company bear limited liability, and this means that they are not personally responsible for any financial or legal errors of the business. It is this risk reduction that makes a limited liability company a very popular business structure.
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The negatives: Limited Liability companies are often more complex than individual ownership or partnerships, which means high initial costs, and the hesitation of some venture capital funds to invest in Limited Liability Companies due to the tax considerations and complexity mentioned above. However, they are easier to operate than a company because they are not subject to the most formalities.
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How taxes work: Limited liability companies enjoy 'flowing' tax treatment, and this means that the owners - not the limited liability companies - are taxable. Having only one level of taxation makes taxes easier. Find the IRS tax forms here.
4. Company
Example: Microsoft, Coca-Cola, Toyota Motor and almost all known companies.
What it is: A legal entity that is separate and distinct from its owners, and has most of the rights and responsibilities that an individual possesses (to enter into contracts, loans, borrow money, sue others, sue them, employ employees, private assets, and pay taxes.) It is more complex than other business structures, and is Generally proposed for larger, fixed companies with multiple employees.
Pros: It makes searching for financing easy. It also provides the best protection for personal assets, since the founders, managers and shareholders are not (usually) responsible for the company's debts and obligations - only the money and resources they have personally invested.
The negatives: Since they are more complex than other business structures, they may have expensive administrative fees, and more complex tax and legal requirements.
How taxes work: Companies must pay federal, state, and, in some cases, local taxes. There are two different types of companies: 'C' companies and 'S companies'. C companies are subject to double tax - therefore any profit made by C is subject to tax on the company when it is earned, and then taxed on shareholders when distributed as profits.
The company does not receive a tax deduction when distributing profits to shareholders. Shareholders cannot deduct any loss to the company, but they are also not directly responsible for taxes on their profits - only on the profits they provide to shareholders.
S corporations, on the other hand, have only one level of tax. Learn more about the difference between 'Company C' and 'Company S' here, and search for IRS tax forms here.
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Pros: As the name implies, the owners of a limited liability company bear limited liability, and this means that they are not personally responsible for any financial or legal errors of the business. It is this risk reduction that makes a limited liability company a very popular business structure.
companies setup in dubai (https://dubaicompaniessetup.ae/Eng/companies-setup-in-dubai/)
The negatives: Limited Liability companies are often more complex than individual ownership or partnerships, which means high initial costs, and the hesitation of some venture capital funds to invest in Limited Liability Companies due to the tax considerations and complexity mentioned above. However, they are easier to operate than a company because they are not subject to the most formalities.
Setting up a company in Dubai (https://dubaicompaniessetup.ae/Eng/setting-up-a-company-in-dubai/)
How taxes work: Limited liability companies enjoy 'flowing' tax treatment, and this means that the owners - not the limited liability companies - are taxable. Having only one level of taxation makes taxes easier. Find the IRS tax forms here.
4. Company
Example: Microsoft, Coca-Cola, Toyota Motor and almost all known companies.
What it is: A legal entity that is separate and distinct from its owners, and has most of the rights and responsibilities that an individual possesses (to enter into contracts, loans, borrow money, sue others, sue them, employ employees, private assets, and pay taxes.) It is more complex than other business structures, and is Generally proposed for larger, fixed companies with multiple employees.
Pros: It makes searching for financing easy. It also provides the best protection for personal assets, since the founders, managers and shareholders are not (usually) responsible for the company's debts and obligations - only the money and resources they have personally invested.
The negatives: Since they are more complex than other business structures, they may have expensive administrative fees, and more complex tax and legal requirements.
How taxes work: Companies must pay federal, state, and, in some cases, local taxes. There are two different types of companies: 'C' companies and 'S companies'. C companies are subject to double tax - therefore any profit made by C is subject to tax on the company when it is earned, and then taxed on shareholders when distributed as profits.
The company does not receive a tax deduction when distributing profits to shareholders. Shareholders cannot deduct any loss to the company, but they are also not directly responsible for taxes on their profits - only on the profits they provide to shareholders.
S corporations, on the other hand, have only one level of tax. Learn more about the difference between 'Company C' and 'Company S' here, and search for IRS tax forms here.