What makes an LLC different from a C-Corp?

When considering incorporation, businesses in Arizona are not limited to filing as a traditional corporation – or C-Corp. There are a number of other possible designations for a growing business in the state, including that of a Limited Liability Company (LLC).

LLCs different slightly from C-Corps because they offer even more flexibility in ownership structure. In traditional corporations, owners are generally completely protected from liabilities related to the operation of the business, since the company is considered a separate entity.

As an LLC, a company may be treated by the Internal Revenue Service as a corporation, partnership or as part of one owner’s personal tax obligations. The term “Limited Liability Company” is taken quite literally in the eyes of tax law – that is to say, each owner, typically called “members” in this case, is partly liable for the organization.

This is particularly relevant in the concept of “pass-through taxation.” While C-Corps are taxed separately from their owners’ personal taxes, LLC tax obligations can pass through to the member owners.

In addition, member owners are not restricted to only individuals. Corporations or even other LLCs can be considered a member owner of an LLC in some states.

Some types of businesses are restricted from taking part in an LLC – including insurance companies – and some states impose laws related to foreign ownership. Because of the nature of LLC ownership, it could benefit businesses considering this type of structure to speak to a Phoenix business attorney.

Attorneys in Phoenix are familiar with the specific legal obligations involved in the process of forming LLCs, and can help interested parties file their Articles of Organization with the Arizona Corporation Commission.

Categorised in: Arizona LLCs, C-Corporations & S-Corporations

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