Ask a CPA

A limited liability corporation offers limited liability to its owners, but may elect to be taxed as a partnership which passes all the income and losses through to its owners. A C corporation is taxed at the federal level and profits are either retained by the corporation or distributed to the shareholders. A profit distribution is called issuing a dividend. These profits are then taxed as income in the shareholders personal taxes. With a LLC, the owner has options of how to be taxed. The IRS allows 3 choices. A Corporation tax like a general C corporation, Partnership taxation like a S corporation or as a Sole Proprietorship.

DBA is an acronym for "Doing Business As". It is also known as a Fictitious Name. Most states require that sole proprietorships and partnerships that are conducting business under a name other than the owner(s) must file for a DBA certificate in the county where business is conducted. The DBA certificate is generally obtained at the Clerk of Court of the county in which business will be conducted. Fees are typically between $100 and $225 and most courthouses have records that may be searched to determine if your suggested name will be unique.

Interest Rates for Q1 and Q2 2012 will continue to be charged as follows:
3% for overpayments (2% for corporations)
3% for underpayments
5% for large corporate underpayments
0.5% for the portion of a corporate overpayment in excess of $10k.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points.
The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point. Further, the federal short-term rate that applies during the third month following the taxable year also applies when determining estimated tax underpayments during the first 15 days of the fourth month following the taxable year

Yes, An LLC and a C Corporation may be owned by another business instead of individuals. S Corporations, Limited parnerships and Sole Proprietorships cannot be owned by other businesses.

Yes. LLC's have similar liability limits as do C or S Corporations. Sole Proprietorships and Limited Partnerships are personally liable for business liabilities.

No. There are no citizen requirements for LLC's, Limited partnerships, Sole Proprietorships or S Corporations. There are citizen requirements for S Corporations.

A LLC similar to S Corporations, Limited partnerships and Sole Proprietorships report theor profit or losses on there personal tax returns.

If you have a business that generates a big profit over and above what you would consider reasonable compensation for the services that the owners provide, you may be unnecessarily subjecting the profits to self-employment taxes if you are operating as an LLC taxed as a partnership.
If you think your business may fit this description, your LLC may benefit from choosing to be treated as an S corporation under the tax laws.
To have your LLC receive the tax treatment of an S Corp, you must file an election with the IRS using Form 2553. You must file Form 2553 within the first two months and fifteen days of the beginning of the tax year in which the election is to take effect.
There are drawbacks, however, so no decision should be made without discussing your own situation with a qualified professional.

In an S corporation, only the salary paid to the employee-owner is subject to employment tax.
The remaining income that is paid as a distribution is not subject to employment tax under IRS rules. Therefore, there is the potential to realize substantial employment tax savings.
A major factor that differentiates an S corporation from an LLC is the employment tax that is paid on earnings.
The owner of an LLC is considered to be self-employed and, as such, must pay a “self-employment tax” of 12.3% which goes toward social security and Medicare. The entire net income of the business is also subject to self-employment tax.

A S corporation has no flexibility in how profits are split up amongst its owners.
The profits must be distributed according to the ratio of stock ownership, even if the owners may otherwise feel it is more equitable to distribute the profits differently.