Far too often, entrepreneurs are unaware that LLCs and corporations are very different. Although virtually the same from a liability protection standpoint, they are extremely different from a tax standpoint. A lawyer and a CPA can help you evaluate the pros and cons of corporations and LLCs, but in the meantime, the following are some basic guidelines:
- In our firm, we use LLCs as the entity of last resort, because of the extreme junk fees – called the “Gross Receipts fee” that apply to LLCs (but not to corporations) in California.
- In California, the initial $800 franchise tax is waived for corporations, but not for LLCs.
- Licensed professionals cannot operate through LLCs in California
- LLCs are best where the company will own real estate.
- S-Corporations are best except where the corporation will have shareholders who are foreigners or other companies
This is really pusing the boundaries, and not in a good way, of what exactly an infographic should be. The graphic portion of this is just text on sticky notes and a piece of ruled paper. It seems fair to say that the design effort was minimal and not quite passing.
Even though the design was lacking the information is actually helpful if you are looking to start a business in California and need help deciding if LLC is the way to go or should you incorporate. There are probably more things to consider and therefore more information should have been included.