Should I set up a C corporation or an LLC?

There are advantages and disadvantages to establishing a subsidiary company as a C corporation and a LLC. If you’re considering expanding into America, you’ll need to decide which form your business entity will take. You’ll need to do extensive research before you establish a subsidiary, consulting your lawyer for expert advice.

There are advantages and disadvantages of setting up a subsidiary as an LLC or a C corporation. Establishing your business as a LLC will ensure that you’ll limit your liability for legal, tax and cost affairs. But you’ll need to file federal tax returns every year, and setting up a LLC often has high upfront costs. We have more information on LLCs here.

On the other hand, C corporations:

  • offer great potential for business growth
  • enjoy a high level of credibility in the eyes of suppliers and lenders
  • benefit from the fact that there’s no limit on the number of shareholders

However, there are disadvantages to incorporating as a C corporation:

  • C corporations involve a number of rules and regulations
  • C corporations are subject to a great deal of government oversight
  • C corporations are taxed twice: once as a business before dividends are then taxed again once dividends have been distributed

We have more information on C corporations here.

Ultimately, you’ll need to factor in upfront costs of setting up, the structure of your company and the way in which you require it to operate, the level of liability you’d like to limit, as well as tax costs and legal fees. Consult your lawyer for expert advice to help you reach the right decision.

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