By Giovanir Freire
Introduction
This work aims to explain to the reader the different company structures in the corporate field, in another opportunity we will address the tax structures. When people hear the expressions “LLC”, “Corp”, “Inc” etc., they must understand that they are the ways in which companies were incorporated into society.
In general, LLCs are the most suitable for small and medium-sized companies here in the United States, as they are a simpler structure and at a lower cost.
An analogy for the reader to understand; LLCs are similar to LTDAs in Brazil, and Corps are similar to Corporations. So, dear reader, I ask you: Why in Brazil are small and medium-sized companies limited? The answer is simple, for simplicity and the lowest cost. Corporations are generally used by large companies or for a specific purpose. The form of incorporation and the cost of accounting for an S / A is much higher.
1. Limited Liability Company (LLC
The Limited Liability Company (LLC) protects the personal assets of the partners of the companies in most cases (bankruptcy or legal action). Understand that there is no protection against fraud and tax evasion; For this reason, it is very important that the partners of the companies present their income tax returns and pay their taxes.
2. Corporations
Corporations offer their shareholders greater protection than LLC, however, the cost of forming and maintaining a corporation is higher than that of an LLC. Another negative point in relation to corporations is that they need to file their income tax returns and pay income taxes (federal and state), unlike LLCs that only deliver federal income taxes and do not pay income taxes.
Corporations are divided into sub-categories
2.1 C Corps – Corporations can be a good choice for medium or high-risk businesses, businesses that need to raise money and businesses that plan to “go public” or eventually be sold.
2.2 S Corp – It is a special type of corporation designed to avoid the double taxation disadvantage of regular C corporations. S corps allow profits and some losses to be passed on directly to the personal income of owners, without ever being subject to corporate tax rates.
3. Partnership
Partnerships are the simplest structure for two or more people to have a business together. Partnerships are divided into two sub-categories:
- Limited partnerships (LP) – have only one general partner with unlimited liability and all other partners have limited liability. Limited liability partners also tend to have limited control over the company, which is documented in a social contract. Profits are passed on to personal tax returns.
- Limited liability companies (LLP) – are similar to limited liability companies, but assign limited liability to all owners. An LLP protects each partner from debt against the partnership, they will not be responsible for the actions of the other partners.
Partnerships can be a good option for companies with multiple owners, professional groups (such as lawyers, lawyers, engineers, etc.).
Giovanir Freire: Business Administrator, Accountant, Postgraduate in Controllership, Specialist in tax and succession planning, full professor in tax accounting, accounting practice and calculation of labor settlement. Works since 2019 in the United States with opening of company, application of ITIN, income tax of company and individual. [email protected] (407)394-0888.
Referência Bibliográfica: Sunbiz. U.S Small Business Administration, Entrepreneur.
