Types of Companies

Types of Companies, Info and Forms
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Type of Company	C Corporation	S Corporation	L.L.C.
Ownership	No limit on number of shareholders; no limit on stock classes	Up to 100 shareholders; only one class of stock allowed	No Limit to the number of Members
I.R.S. and Tax Treatment	Double Taxation, first corporate level then when paid as dividends to shareholders	The profits and losses are passed through to the shareholders	An LLC is not taxed - profits and losses are passed through to the members
Personal Liability	None	None	None
Management	Officers run company and Directors over-see operations	Officers run company and Directors over-see operations	By Members or Assigned Manager
Contributions	Shareholders buy stock in the corporation, but only one class of stock is allowed for S Corps.	Shareholders buy stock in the corporation, of any class	Members (Owners of an LLC) invest or provide services and/or property to LLC

For the I.R.S.'s take on Limited Liability Companies and S Corporations

A Limited Liability Company (LLC)

A relatively new business structure allowed by state statute.

LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation.

Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit “single member” LLCs, those having only one owner. This is perhaps the best argument against a sole-proprietorship. The safety of an LLC is unmatched.

A few types of businesses generally cannot be LLCs, such as banks, insurance companies and nonprofit organizations. Check your state’s requirements and the federal tax regulations for further information. There are special rules for foreign LLCs.

For additional information on the kinds of tax returns to file, how to handle employment taxes and possible pitfalls, refer to Publication 3402, Tax Issues for Limited Liability Companies.

S Corporation

An eligible domestic corporation can avoid double taxation (once to the shareholders and again to the corporation) by electing to be treated as an S corporation. Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. On their tax returns, the S corporation's shareholders include their share of the corporation's separately stated items of income, deduction, loss, and credit, and their share of nonseparately stated income or loss.

If you are an S corporation use the information in the charts below to help you determine some of the forms that you may be required to file.

If you are an S corporation then you may be liable for...

Income Tax - 1120S (S corporation)

Estimated tax - 1120-W (corporation only) and 8109

Employment taxes:Social security and Medicare taxes and income tax withholding

Federal unemployment (FUTA) tax
Depositing employment taxes

941 (943 for farm employees)
940 or 940-EZ 8109

For Useful Forms for LLC's
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Additional Resources
Form 2553, Election by a Small Business Corporation (PDF).
Instructions for Form 1120S (PDF).

Publication 583, Starting a Business and Keeping Records

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