Are Corporations Too Old-Fashioned?

This post is in: Business

10-20-10We talk a lot about using LLCs these days, so much so that people ask us, “Why use a Corporation at all, if LLCs can do it all and more?” Is there a place for Corporations still?

I think the answer is definitely “yes.” I can think of several occasions where I will reach for Corporation Articles, instead of LLC formation documents.

  1. The company intends to go public. Securities laws in the United States (and most other places) have one thing in common: public companies need to be able to easily transfer ownership of shares from one owner to another. But most LLCs have transfer restrictions built into them, and S Corporations have restrictions on both the number of owners as well as the location of those owners. There’s really no substitute for a C Corporation if part of your exit strategy is going public.
  2. International Ownership. LLCs, partnerships and S Corporations all have special tax treatment that is specifically designed for the US tax system. These entities all allow the company to flow profits and losses through to the owners, where tax is declared and paid at the individual owners’ levels. But that system is contingent on taxpayers paying US taxes. With international owners, outside of the US tax system, there’s a gap where money could theoretically leave the country untaxed. The IRS doesn’t allow that to happen and imposes a withholding tax on all profits destined for international owners. It involves extra paperwork, and an extra burden on the company. But a C Corporation pays tax at its own rate, meaning that money isn’t leaving the country without being taxed at least once. That’s why international owners are always best off using a C Corporation.
  3. Caselaw and History. I love LLCs, but history is on the side of the Corporation. LLCs first came into being in the United States in 1973, whereas Corporations have a couple of hundred years behind them, and are accepted and understood all over the world. That’s not to say that you aren’t safe using an LLC. Even in just under 40 years, LLCs have built up an impressive body of caselaw, as courts hammer out the details. But compare 40 years with 200+ years, and sometimes you’ll find that all that history and the solid legal foundation that corporate law has been built on is the difference maker.
  4. Our goal with the 2011 Operation Guide for Your Corporation, was to give you the information you need to effectively plan your next corporation from top to bottom. We talk about the fantastic benefits that C Corporations offer, along with the special tax traps you must be aware of. Plus, we’ve given you dozens of easy-to-use forms to customize your own C or S Corporation, including how to get your IRS Tax ID number AND how to make an effective S Corporation election with the IRS, that will be accepted easily and quickly. Plus, in our special this week, we’ve bundled the 2011 Operation Guide for Your Corporation with two other products, the 2011 Operation Guide for LLCs and our ever-popular product, The 60 Minute Handbook. Now you can do up Minutes for your corporate meetings quickly, accurately, and easily. We’ve got 60+ templates for you to use, each customized for different situations. This special gives you 3 products for less than the price of any 2 products individually, meaning big savings in your pocket today, if you act now.


  1. TC says:

    INC s-corp

    Can that do business in any of the 50 states?

  2. Megan Hughes says:

    Hi TC,

    Yes, corporations can do business in any of the 50 states – C or S Corporations.

Leave a Comment