Wick & Trautwein, LLC
Call Today
Local
970-237-5694
Toll Free
866-686-1410
Broad Based Experienced Legal Help Since 1972

Creative Solutions, Exceptional Results

The law firm of Wick & Trautwein, LLC, has a long history of partnerships with the people and businesses of northern Colorado and southern Wyoming

How do limited liability companies and corporations differ?

The way a Larimer County small business is structured determines how owners and shareholders are taxed. Liability issues are equally important for Colorado entrepreneurs, considering whether to form a limited liability company rather than incorporate a business.

Unlike LLCs, corporations are separate entities from the people who own, manage and invest in them. The Internal Revenue Service treats corporations or C-Corps as individual taxpayers. Consequently, a double taxation structure is created: the company pays income tax, as do people involved in the business.

LLCs are not taxed separately from the member owners. Profits and losses "flow through" the business to members, who report them on individual income tax returns. However, limited liability companies share something in common with corporations -- shareholder protection against creditors and legal claims.

Corporate structures are beneficial when the goal is a large number of investors. No other business structure allows a company to issue stock. Corporate stock provides new investors and employees with a personal stake in the company's success.

Some C-Corp businesses are further defined as Sub-S corporations. S corporation income is taxed at the shareholder level, not at the business level, as with C corporations. Taxation for Sub-S corporations is similar to LLCs, with the added benefit of the ability to issue stock.

Many features are common between C corporations and S corporations, like the inclusion of all employee-owners on the business payroll, but the business designations vary widely in other ways. For instance, the opportunity to offer fringe benefits for owner-employees is generous for C corporations but limited for Sub-S Corps.

Entity formation is a matter of choice. However, the legal structure a company takes also depends upon certain qualifications and restrictions. Tax and liability implications will play a significant role in your decision.

Business attorneys help Colorado entrepreneurs establish a foundation or restructure companies based on long-range goals, like limiting or expanding investor participation.

Source: FindLaw, "Corporation versus LLC" accessed Feb. 04, 2015

No Comments

Leave a comment
Comment Information
Watch More Videos

We Take Your
Emails Seriously

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Wick & Trautwein, LLC BBB Business Review
FindLaw Network
Firm Locations
Wick & Trautwein, LLC
323 South College Avenue #3
Fort Collins, CO 80524

Phone: 970-237-5694
Toll Free: 866-686-1410
Fax: 970-482-8929
Fort Collins Law Office Map
Wick & Trautwein, LLC
513 Big Thompson Ave
Estes Park, CO 80517

Located in Lower Stanley Village
Phone: 970-586-3505
Fax: 970-586-3269
Estes Park Law Office Map

Windsor Office
(by appointment only)
421 Main Street
Windsor, CO 80535
Toll Free: 866-686-1410
Map and Directions