LLCs Vs. Corporations

Down economies are often accompanied by an increase in the number of startup companies and entrepreneurial ventures. These are also times when many existing businesses will choose to restructure themselves in order to become more competitive and to save money wherever possible.

In either case, choosing a business organization type (i.e., legal structure) is one of the first and most important decisions that must be made.

Since 1981, attorneys at Benckendorf & Benckendorf, P.C., have been helping clients make business organization choices that best fit their individual needs. To learn more about how we can help you — call us directly or contact us online to schedule an initial consultation.

Limited Liability Companies, C-Corporations and S-Corporations

Because of the personal liability risks associated with partnerships and sole proprietorships — the business entity choices for many small companies often get narrowed down to the LLC versus the S-corporation or C-corporation.

Which one is right for you? Unfortunately, there is no easy or even appropriate way to answer that question on a Web site. The answer is completely dependent on your unique situation. Even so, a few things are important to keep in mind.

First, there is the issue of taxes. With an LLC the default tax accounting classification is either a sole proprietorship or partnership. These classifications work especially well in the early years of a business where profits may be minimal or non-existent, or for businesses with real estate holdings or other passive investments. This said — for income tax purposes, you may still want to have the LLC reclassified as an S- or C- corporation (particularly if self-employment taxes are likely to be high).

Another important consideration is ease-of-use. Generally speaking, an LLC is a much more flexible, easy-to-use structure, especially when there are only a limited number of investors or shareholders involved. Conversely, a corporation might be better-suited to your needs (despite the more rigid structure and record-keeping requirements) if there are many investors or if you are planning on providing significant "fringe" benefits to yourself or key employees.

We Do It Right. Our Clients Deserve It.

Talk to one of our lawyers about your needs by contacting us online, or by calling any one of our three central Illinois office locations to schedule an appointment.

Peoria: 309.265.0812 / Morton: 309.938.4296 / Eureka: 309-265-0812