Asked in Business Formation, Business Law and Tax Law for Wyoming

Q: What is the effective difference between a C-Corp and an LLC taxed as a C-Corp?

I am from the UK and looking to setup a US business. I've decided that taxation as a C-Corp is best as I am looking to build capital and retain profits in the company so a pass-through entity is not ideal. I understand that as a C-Corp, things are more formal and decisions require minuted resolutions/meetings but the incorporation cost (in Wyoming at least) is the same so I'm not sure if there is any reason to choose one over another.

1 Lawyer Answer

D. Mathew Blackburn

Answered
  • Tax Law Lawyer
  • Englewood, CO

A: For tax there is no difference. For state business compliance issues a Corporation has slightly more things that have to be done to maintain the corporate veil. Annual meetings are required where an LLC can waive them you have to set a par value for shares and report the number of shares issued unlike an LLC where that information is in the operating agreement and not reported to the state, and corporations have to have minimum officers of President, Secretary, and Treasurer.

Mainly little administrative matters that frequently get ignored and cause problems in litigation.

Ultimately the difference is that if you're not dealing with the IRS or a state tax department you're what you filed for with the state, i.e. LLC or Corporation.

Michael R. Smith and Andrew B. Gordon agree with this answer

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