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Unread 08-14-2012, 08:45 PM   #3
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It would all depend on what the formation papers of the corporation state. Those papers will spell out the operations of the corporation and how all aspects are handled. The bylaws (sometimes an Operating Agreement is used but this is normally an LLC item) should spell out all binding items for the people involved.

In a corporation all earnings are corporate earnings and there are rules restricting how those earnings can be distributed to officers, etc. The LLC is sort of like a partnership with some corporate liability protections and earnings flow through to each member according to the Operating Agreement.

Our business exists within an LLC. The Limited Liability Company organization allows for limited liability exposure and allows the members to flow the profits through to each member at individual tax rates thereby escaping the much higher corporate tax rates.

I can not advise you on which would be best but I can say that Incorporation is normally used by large entities and LLC's are normally used by small businesses. I can say that if it were me I would research the LLC route. This link would be a good start: Contacting your Secretary of State will give you a more accurate idea of the cost. Our cost, in KS, was around $1K.

These links may help you to decide which would be best for your business.
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