Sole Proprietor vs. LLC vs. S Corporation vs. C Corporation | Legal & Tax Differences
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- Опубликовано: 7 фев 2025
- This video discusses the Sole Proprietorship, LLC, Corporation (including S Corporations) both from a Legal and Tax perspective. I also discuss what a Professional Limited Liability Company is as well as the difference between a Single Member LLC and a Multi Member LLC.
If you're ready to form your business, I've partnered with the following companies. Use the links below as some of them include coupon codes to receive up to $100 off their services:
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Note: The due dates for when to file the various tax documents have recently changed...they are as follows:
Sole Proprietorship: April 15th
S Corporation: March 15th
Partnership: March 15th
C Corporation: April 15th
I created this video because there is a lot of misinformation out there on RUclips and other various channels and it’s crucial you do this correctly when you start a business.
Take what you learn from this video and ask your legal or tax professional all of your specific questions. If you want to contact me, my information is below.
If you learned something from this video, please like and subscribe and follow me on my various social media handles below. If you would like to contact me with a specific question, please visit my website or leave me a comment.
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Email: navi@navimarajcpa.com
Phone: (561) 318-0232
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This video was created for informational purposes and it is not to be construed as legal and tax advice specific to your unique situation.
© Navi Maraj CPA PLLC. All rights reserved.
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Also, the due dates for when to file the various tax documents have recently changed and I misspoke in this video. The correct due dates are as follows:
Sole Proprietorship: April 15th
S Corporation: March 15th
Partnership: March 15th
C Corporation: April 15th
How can i get a code $100 off for LLC?
If I am building a business to sell it. What’s the best approach to save on taxes at the final sale of the company.
I work at a law firm that specializes in asset protection and business structuring, and you were spot on I am glad you used the different colors for the electives taxation and what is default for new business owners this is hard for people to understand. Thank you for taking the time to do this explanation video.
Hi Karen. Thanks so much for the feedback. You’re absolutely right, very hard concept for new business owners to understand.
Man you are an incredible Teacher. Easy to understand and follow. You explain this stuff really well, and even the way you use your hand as brackets to discus a particular structure is super cool. I'm trying to start my enterprises up and spent hours finding the right corporation to file and this was the vid that made it all click for me. Thanks a TON man. So humble and grateful right now.
Thanks so much for the feedback Bronson! Best of luck to you with your new venture.
Super helpful, Navi. Thank you. Such a great, concise explanation that I haven't found anywhere else!
Great Video Navi, super informative and I appreciate you mentioning that most people make the switch at about $40k to opt into being taxed like an S-Corp. Super helpful!!
Thank you. I've got other videos in my library breaking down the reason why $40k makes sense. Here is a link to that video if you want to check it out: ruclips.net/video/QFYFGfHOuwI/видео.html.
Love the visual and your verbal explanation. It's so true that there is so much bad info out there. I cringe when I hear someone say their company is S-Corp because that's not a business entity and rather a tax structure. Thank you for putting this video together and sharing with the masses! Saving it and will be sharing it with others.
Thanks Joana...appreciate the feedback!
Thank you so much for not having an accent, this was extremely pleasant to watch.
Hey Navi! Thanks for posting this video. I've seen so many of people making these videos and they are so convoluted and hard to follow. My one recommendation is for you to state where you work- a lot of people may want to hire you but if they don't realize you're local or certified in their state, they may not even bother going to your website.
Thank you for taking the time to educate us.
All the best!
Tom
Brooklyn, NY
-NYC Video Podcast
Thanks for watching and for the feedback! I appreciate it.
This was the single best explainer video of the different Corp types I needed to learn about. Thank you!
Thank you. A team discussing with me my Financial Reporting course.
Thank you SOOO much for this video!! This is super helpful. I am starting a business with a partner that lives in another state and wanted to make sure we set everything up correctly. I have spent hours researching this and this video was THE MOST HELPFUL in breaking down the different types of entities and where to start out. I feel like I finally have some clarification. Thank you again!
Big strategic person-person business development is the key to success in today's business world.
Sir, you explain in a way that an average person like me can understand. Thank you.😇😇😇
Excellent video! Short, to the point, with easy to understand illustration. Thank you!
Thank you for the visuals! It's so nice to have an idea of all of the options to narrow down what works best for each small biz owner.
I cannot overstate how helpful this video was. Thank you!
Thanks so much Sheena! Really appreciate the feedback.
I appreciate you mention the SM LLC, no others yet have.
Excellent diagram and explanation. I haven't seen anything explained this well. These RUclips attorneys just throw out terms like "schedule c" and "1065" like your supposed to know without ever explaining what's what.
@Braden Souder Thank you for the feedback! Glad that you found it helpful and informative.
I didn’t even know about PLLC.. this video was so helpful and necessary
Great video. My wife and I are nurses. We work as self employed 1099. I could open a single member LLC and do S election. And they both work in the same LLC as an S corp. And that the 1099s are reported from both of them through the S Corp. Then the S corp generates w2 for each one and the dividends pass through K1 to the owner. Or each would have to open their own LLC and make S election. thanks
This was a great video, straight to the point. Makes me a little more secure about getting my llc started thank you.
Thanks for the feedback Alejandra! Glad it was helpful. Don’t forget to check the links in the description to form your LLC for free if you’re ready.
Really good video. Cleared some things up in my head since I am a noob.
Thanks for the easy explanation. Subscribed ! 👍
Thanks. I've been meaning to change to S-Corp from C-corp
You’re welcome Ben. Consult with your tax professional to make sure it is the correct thing to do based on your specific situation.
Mr Navi this was great information as a novice beginner
Thank you so much. This was very helpful! Heading to Google to find a local CPA now!
Thank you so much! I have been trying to decide how to structure my business for a very long time. You helped me finally make the decision.
You’re welcome! Glad you found the video helpful.
It's kinda important to mention WHERE you are and which jurisdictions oversee that!
I've been researching information all day. your video was straightforward and very helpful. Thank you.
You’re welcome Whitney…glad it was helpful!
Thank you so much for this valuable information! Be blessed!
This is excellent - coming from a tax attorney / CPA! Looking back through your videos to see how you got into doing this!
Thank you so much this video was exactly what I needed!!!
Thanks Cru - glad you found it helpful. Please share with others if you think it will help.
Just subscribed to your channel. That was an awesome vid. Simple, and straight to the point! Thanks
Thanks for watching and subscribing Edgar! Glad you learned and found it helpful.
Thank you! Your videos are most informative and very easy to listen to. The best!
Thank you for the feedback John - means a lot!
Excellent video! Thanks for sharing! I have shared with others studying for the CPA.
Thank you! it was so hard to find this information. You got right to the point
Thank you so much, I'm currently researching the best option for a brand new small business.
Great - glad the videos are helpful!
Amazing information. Easy to follow and understand. Great presentation.
Thanks for the feedback @Bd Manus!
Keep up the videos boss, the community needs more information from qualified individuals!
Will do!
when entering vendor w9's into an ERP acctng software for these fed tax classifications, are S Corp's and partnerships; to be treated as exempt? (for when the 1099's get produced year end)? And if so, are these the only 2?
I have a separate video that discusses if a 1099 needs to be issued or not. Do a search for that video and it may answer your questions - it's not a straightforward answer or else I would provide the answer here.
Navi I appreciate you for making this video! I feel like I have a much better understanding now.
That’s great to hear Neal! Thanks for watching!
Navi one of the missed information that most all of us don't received is that we have to pay $ annually to our Estate if we decide to file and articles or be treated as S Corp if we want to save money on taxes.
hi. nice discussion. all I wanna ask is what does "s" and "c" corporation stands for?
Subchapter S and C of the Internal Revenue Code.
@@NaviMarajCPA thank you. is that the last thing to know about the origin of those mysterious letters? is there no definite reason why "s" is s and "c" is c?
Thank you so much for this information. My mom wants me to register her cleaning business and I’m learning all this new stuff. I’m going for LLC 😅
You're welcome!
Thank you so much for making this video. It is very helpful.
You’re welcome Kushagra!
Great content!!! My question is, does it apply in Canada?
Is it better to stay as a sole proprietor until you hit the 40,000 threshold or is pllc what you want to get as soon as you can for the different tax benefits out for what ever reason that influences you to get it in the first place
You are so clear thank you so much. You got a new subscriber 😊🤓👍🏾
Appreciate the feedback Cocoa...thanks for subscribing!
Short and to the point - much appreciated!
Thanks Rinaldo!
3 questions: Does the owner of a C-corp have to take a salary? Example: The owner of one major company said he didn't pay personal taxes because he didn't take a salary. Can you change an llc to a corp as it grows? Reason: if I formed a company now it might be a couple years before it could afford a "reasonable salary" for me. Does a C-corp have to offer its shares for sale or can it remain private, in the hands of 1 or 2 owners? The reason for this is that there are distinct advantages of the C-corp that are beyond the scope of taxes and liability protection.
Very helpful man! Thanks! Even wrote down all these notes since I am going to have to start doing taxes for my business and side business. Once again thank you very much for this!
Thanks for the feedback. You're not the only one who has told me they take notes while watching!
What if a person is the sole provider for a non-profit or not-for-profit? A persion who itemizes allot and gives funds, donations, and time to charities, churches, non-profit organizations, and not-for-profit organizations. Is their a sole proprietor option for non-profit organizations and/or not-for-profit organizations??
Great video, thank you very much. Could you please write a work about 5472 form. And maybe about SM LLC owned by None resident. Thanks again
Wow, just a fantastic explanation.
Thank you, awesome explanation!
Navi, the IRS says c corp tax returns are typically due 4/15. Would this be a recent change? You are amazing and this video is very informative thank you
Great video
Thank you for the feedback...glad you found it helpful.
Só what is the the best option for 1 man e commerce store (it's a brand like how Nike would be, but not similar to Nike products) (that wants to on the future to go public)
I just started my LLC. Thanks for the info.
You're welcome Daniel...best of luck to you and your new business!
@@NaviMarajCPA to
Daniel, why?
Very well put together. Thank you.
You’re welcome…let me know if there is anything else you need help understanding.
Can you have multiple businesses in an LLC? As a Realtor and a Landlord would it benefit to have a PLLC instead?
What is the paperwork involved in forming a LLC sole proprietor? Because my tax guy mentioned that if I work alone I file in April but if I have a partner I file in March? My tax guy is clearly mistaken about what LLC as a sole proprietor really means. So how do I explain this to a tax person? 🤔 they tend to associate LLC with s corp only.
Great video! Thank you so much! I have a question if it’s possible for you to give me some guidance, I filed my 1120S and I deducted my car expenses (gas, maintenance, insurance) but I also do delivery driver jobs for Amazon and Walmart for my 10099-NEC can I deduct mileage on schedule C of my 1040 for those jobs? I use the same car for everything my LLC. Delivery driver jobs and personal
Navi, thanks for the video.
Can a sole proprietor file taxes as married filing jointly? or should it be married filing separately?
R u saying that an LLC is the business entity and that the Scorp is the filing status of the LLC. I'm about to start a small business and was told to open as an Scorp. Just wanting clarification.That for your videos.Im grateful
Yes Misses Miller that is exactly what I’m saying. Legal entity types and tax classifications are two separate things.
Hi
I am an optometrist in NYS, I work 1 day as a W2 and 4 days as a 1099... I did not open LLC or scorp... the self employment tax is high but so is Scorp tax... not sure what to do and what else I can write off to save money... is there any benefit of just being a LLC
you used the word 'form' a few times in reference to an s corp. you also said it's not as legal entity so what is thing that we are 'forming' and where do we do this? sorry, I'm having trouble with this part.
Typically you would "form" or create an LLC or C Corporation with the state you are doing business in and then "elect" to have the LLC or C Corporation taxed as an S Corporation by completing paperwork with the IRS.
@@NaviMarajCPA I think I finally got it now. Some youtubers just make it sound like an 'entity'. Unless we know better it's confusing. Took me forever to grasp.
I'm confused. It seems an S corp simply passes the tax burden on to the single member owner. Could you clarify how the owner (now an employee of the S corp) will get reduced taxes.
Do S-Corp have to pay corporate tax? If so how is it calculated? I reside in PA so corporate tax is 9.99%, so if have become an S-Corp will I be paying more in taxes?
S Corps generally do not have to pay corporate taxes....corporate taxes are generally reserved for businesses taxed as C Corporations. There are some states that have special taxes on S Corporations but I don't believe PA is one of them.
We just started a single member LLC. We would like to open a business credit card but we have to choose between corporation, partnership, and sole proprietorship for the company structure on the credit card application. Which should we select?
Hi Sir. For example, my boss wanted to start a a small business in the US soil. (Services Business) If they decided to start as an MM LLC, is there a certain requirement of how many Non-US Incorporators needed and US Citizen Incorporators needed?
Very useful video! I'll recommend it to my colleagues
Thanks for the feedback Anastasiya. Hope your colleagues find it helpful as well.
Hey, noticed you’re in Florida. I am a veteran trying to start a business in Florida. I’m 100 % disabled VA, and want to run the business out of my home. Can I do that and still use the tax credit for disabled vets? I have so many other business questions, I want to get this business going and I’m motivated to learn as much as I can before I plunge! Thank you for the information in this video, based on it I think I have an understanding of what choice I have to make soon.
My scenario is that I have two "LLCs with S-Corp designation" and one "C-Corp with S-Corp designation". I'd like to setup a holding company, and wondering if is better to form the holding company as a "C-Corp with S-Corp designation" or "LLC with S-Corp designation"? The holding company will have 100% ownership of all subsidiaries, so I intend to file Form 8869 for each subsidiary. Looking forward to your reply or a video on this.
Easy to follow, well done.
Hi Navi, if my existing sole member LLC adds a partner and becomes a partnership, will my EIN change? I was told that it wouldn't in that circumstance. Thanks!
Thank you for this breakdown.
Thanks Navi! Very helpful information
Is there any tax difference between having an LLC taxed as a C corp vs forming a C corp? If not, what is the benefit of having a C corp since LLC docs are easier to manage compared to C corp?
For a Single member LLC and filling as a sole proprietor under a 1040 form is there any tax benefits on gains such as in stocks
For example I create a business such as Enrique’s real estate and any gains made from the rentals are instead placed into an investing account managed by me and is owned/under my LLC..
This year in stocks has been amazing and planing on making an real estate entity just trying to find what LLC would be best for me if I wanted to open/make a savings account, investing accounts, and house properties under... also I most likely will be by myself
Hi Enrique...thanks for watching and asking your questions. I know you asked a simple question, but, there is a lot to unpack. Generally, you would form an entity (LLC) per type of activity you are doing. For example, you would not have one LLC that contains your real estate investments and stock investments. Further, if you plan on buying and holding real estate to produce rental income, that is a passive activity, and would be in a separate LLC from short term real estate investments such as flipping or rehabbing. You should consult with a professional who understands the legal and tax implications of what you are trying to accomplish. Please note that this is not tax or legal advice specific to you.
Thank you so much! This clarified so much for me!
You’re welcome…glad you found it helpful!
Nice content. I found this very helpful.
Really Helpful.. Keep Up The Gud Work Bruh✅❤
Thank you - appreciate your feedback and support!
Thanks for the useful video.
You’re welcome! Thanks for watching.
So if I’m looking to start a business myself,alone, while still working a 40 hour job. I should open a SM and do a S corp 1120s for tax? But I need to claim $40k?
How about limited partnership, general partnership, limited liability partnership?
I have a question I accidentally apply for LLCs instead of a solo prop first time applying can they refund me those $200 so I could change it to the correct one first time trying to this month
What company is best for contact center business for a non resident?
Thank you for watching and for your question but unfortunately I can't give specific advice via the RUclips comment section.
Amazing explanation! thank you so much!
You're welcome Joseph! Glad you found it helpful!
Thanks for the great overview!
You’re welcome Dennis! Thanks for watching.
If you start your company as an LLC, is there an option to switch to a PLLC later on once state certifications are obtained?
Great question. I think it would come down to the State. Some states allow you to do a change like this, others do not.
Great video! I have a question, I created an LLC, I'm the only owner. I just want to protect my business from liabilities and also my spouse, in case of divorce. Do I need to file the form 8832 to be treated as a corporation for taxes purposes?
Thank you for the information
Maybe you can answer my question here,
So I make 60k from my full time w-2 job, and I’m looking to start an LlC this year that’s going to make me 40k doing cargo deliveries for 2 different companies, each one will pay me a 1099 form 20k each for the year. So my question is if this business is an Sole Proprietor, LLC or Scorp?
Given this limited information, I would keep it taxed as a sole proprietorship. You can form a SMLLC and it will still be taxed as a sole proprietorship and may provide limited liability protection if you set it up properly and maintain it.
If im a single member sole proprietorship example makeup artist can i file as s corp as well if im the only owner
Thank you, good Sir!
Wonderful video and please make more!
Thank you baba black for the feedback!
What if I have a company in India and I wanna setup a subsidiary in US so what steps should I be taking? I don't know much about SCORP, CORP, LLC....
In India we have structures like PVT. LTD, LLP, sole proprietorship, partnership, HUF, etc.
Hey Manas...sorry, I'm not an expert with this type of structure so I would defer to someone else that is familiar with setting up entities in the US for non-residents.
I ve a Question I live in Mesquite nv and I had a beauty salon in a different country and city and I am trying to figure out what to do I was a sole priority for 2019 and ( ein number)to September 17th 2021 I closed that shop and now I'm in Mesquite nv and opening a new salon but with the same name but I want to form a professional Llc , and do I need to apply for a new ein and LLC also fictions name again then register it too?
Hey Joanna....I'm sorry but your question has too many variables to try and answer here. Thanks for watching and I hope you find the answers to your questions. If you want, you can schedule time using the calendar links on my website.
This video is a life saver
Thanks! I wish it was around when I was first learning about these concepts. 👍🏼
what do you suggest for a options day trader
Is it okay to create a SM LLC and be taxed as a SCorp from the Jump?
Sure is, but it may not make financial sense in your first year. Watch this video to learn why I say that....it discussed when does an S Corp make financial sense: ruclips.net/video/QFYFGfHOuwI/видео.html