As a small business owner, you most likely have had conversations with a
professional to discuss which business entity is right for your growing company.
Whether you choose to incorporate your small business as a limited liability
company (LLC) or an S corporation, you should consider the various benefits of
incorporation.

You may wonder about the differences between LLCs and S corporations. According
to the Small Business Association (SBA):

“A limited liability company (LLC) is a hybrid type of legal structure that
provides the limited liability features of a corporation and the tax
efficiencies and operational flexibility of a partnership. The “owners” of an
LLC are referred to as “members.” Depending on the state, the members can
consist of a single individual (one owner), two or more individuals,
corporations or other LLCs.

An S corporation (also referred to as an S corp) is a special type of
corporation created through an IRS tax election. An eligible domestic
corporation can avoid double taxation (once to the corporation and again to the
shareholders) by electing to be treated as an S corporation.”

Read below to discover answers to common business incorporating questions!

Asset protection

S corporations and LLCs both offer liability protection and limited liability
for business debts and obligations. Incorporating a company allows business
owners to separate and protect personal assets.

Tax benefits

When business owners set up their corporation, they are taxed on individual and
corporate levels; but an S corporations can avoid double taxation of corporate
profits and dividends. An LLC is taxed at the same rate as a sole proprietorship
and provides limited subjection to personal liability. Profit and loss are
typically reported on the owners’ personal income tax returns.

Legitimized business

Adding LLC or Inc. to the end of your business’ title not only safeguards your
business from liability and provides tax breaks, but also helps your business
appear more reputable. Customers and vendors generally prefer to do business
with an incorporated company since the formality adds legitimacy.

If you need assistance with incorporating your business or accounting services,
contact us at (781) 436-5810 or hylencpa.com/contact-us.