S Corporation versus Limited Liability Company – one of the most important decisions a new California business owner can make is to choose a legal entity through which to conduct business. Often times, the decision is narrowed down to two types of entities: (1) the California S Corporation (S Corp), or the California limited liability company (LLC). Both the California S Corp and the LLC provide varying levels of personal asset protection for the business owner, varying tax advantages and disadvantages, and varying complexity in the day to day operations of the business, amongst other differences. The purpose of this article is to highlight some of the key differences when making the choice between a California LLC or a California S Corp.
Dissolution of a corporate entity often makes a lot of sense when it is no longer operating, and all shareholders are in agreement as to dissolution, as it can save a substantial amount in corporate maintenance fees over time, including the $800 annual minimum franchise tax.