Sole Proprietor vs. LLC vs. S Corporation vs. C Corporation | Legal & Tax Differences

This video discusses the Sole Proprietorship, LLC, Corporation (including S Corporations) both from a Legal and Tax perspective. I also discuss what a Professional Limited Liability Company is as well as the difference between a Single Member LLC and a Multi Member LLC.

If you're ready to form your business, I've partnered with the following companies. Use the links below as some of them include coupon codes to receive up to $100 off their services:

Note: The due dates for when to file the various tax documents have recently changed...they are as follows:

Sole Proprietorship: April 15th
S Corporation: March 15th
Partnership: March 15th
C Corporation: April 15th

I created this video because there is a lot of misinformation out there on YouTube and other various channels and it’s crucial you do this correctly when you start a business.

Take what you learn from this video and ask your legal or tax professional all of your specific questions. If you want to contact me, my information is below.

If you learned something from this video, please like and subscribe and follow me on my various social media handles below. If you would like to contact me with a specific question, please visit my website or leave me a comment.

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This video was created for informational purposes and it is not to be construed as legal and tax advice specific to your unique situation.

© Navi Maraj CPA PLLC. All rights reserved.

[NaviMarajCPA]

You can file your LLC or Corporation for FREE using the links below! If you use the links, you can receive up to $100 off any additional services you may want to add:


Also, the due dates for when to file the various tax documents have recently changed and I misspoke in this video. The correct due dates are as follows:

Sole Proprietorship: April 15th
S Corporation: March 15th
Partnership: March 15th
C Corporation: April 15th

[kimnwaneri]

Great Video Navi, super informative and I appreciate you mentioning that most people make the switch at about $40k to opt into being taxed like an S-Corp. Super helpful!!

[KarenSanderson-ni]

I work at a law firm that specializes in asset protection and business structuring, and you were spot on I am glad you used the different colors for the electives taxation and what is default for new business owners this is hard for people to understand. Thank you for taking the time to do this explanation video.

[bronsondiamond]

Man you are an incredible Teacher. Easy to understand and follow. You explain this stuff really well, and even the way you use your hand as brackets to discus a particular structure is super cool. I'm trying to start my enterprises up and spent hours finding the right corporation to file and this was the vid that made it all click for me. Thanks a TON man. So humble and grateful right now.

[crujax]

Thank you so much this video was exactly what I needed!!!

[benhuggins]

Thanks. I've been meaning to change to S-Corp from C-corp

[Thomas-ctgu]

Navi, thank you for this content. I have a question I hope you could answer. I see a lot of YouTube videos with the title “LLC vs Sole Proprietor” I believe I understand that you could be a sole proprietor without forming an LLC. However the IRS doesn’t recognize the LLC anyways for tax purposes, correct? So if I form an LLC for my side business in addition to my w2 full time job. I would be better off forming an LLC and filing as a Sole Proprietor, as long as by business profits don’t exceed 40k. In that case I would file my normal w2 tax return but would file an additional form that cover the business profits and then pay taxes accordingly?

And a follow up question, lol, as far as LLC goes my understanding is you are separating the business from you and your personal assets. But if you have an LLC and file as a sole Proprietor could that not be an issue if the business were to get sued? It seems sort of like an oxymoron if all the business profits are going through a sole Proprietor instead of the profit staying in the business and wages being paid to the owner like in a S Corp. Maybe I’m just super confused.

[XL]

Thank you for the information
Maybe you can answer my question here,

So I make 60k from my full time w-2 job, and I’m looking to start an LlC this year that’s going to make me 40k doing cargo deliveries for 2 different companies, each one will pay me a 1099 form 20k each for the year. So my question is if this business is an Sole Proprietor, LLC or Scorp?

[daisyvargas]

Thanks so much for this video. I have some questions: Is an S-corp just a tax perspective or a legal entity as well? In other words, If I have an LLC, do I need to do any paperwork with the IRS to change my LLC to an S-corp? Or can I just keep my LLC and do taxes as an S-corp?. Also, what is the difference between a salary and a distribution? In what category do those two fall, income tax or employment tax? Thanks so much!

[Graceguia]

when entering vendor w9's into an ERP acctng software for these fed tax classifications, are S Corp's and partnerships; to be treated as exempt? (for when the 1099's get produced year end)? And if so, are these the only 2?

[JCV]

Do S-Corp have to pay corporate tax? If so how is it calculated? I reside in PA so corporate tax is 9.99%, so if have become an S-Corp will I be paying more in taxes?

[robinamunduru]

Thank you. A team discussing with me my Financial Reporting course.

[missesmiller]

R u saying that an LLC is the business entity and that the Scorp is the filing status of the LLC. I'm about to start a small business and was told to open as an Scorp. Just wanting clarification.That for your videos.Im grateful

[abulislam]

Hi, good morning. I am living in NY I want to buy a house at buffalo city ny . I want to my house corporation or LLC no other business only the house . I don’t want some one can sue me . I am planning to rent the house. Please advise me which one is good for me thanks .

[toddlerprodigy]

I have a partnership with Uhual MovingHelper which am I LLC or Sole p.

[BullCheatFR]

Your video is out of sync with the audio. It's distracting :(
Otherwise great content!

[worldwideachievers]

Navi for a franchise with a NOI of $250k would it be better to form a C or S corporation? Do you chat offline? Thanks
New subscriber here

[joanalinares]

Love the visual and your verbal explanation. It's so true that there is so much bad info out there. I cringe when I hear someone say their company is S-Corp because that's not a business entity and rather a tax structure. Thank you for putting this video together and sharing with the masses! Saving it and will be sharing it with others.

[Vijay]

The subtitles are hiding the taxwise explanation of each category

[joannadicarlo]

I ve a Question I live in Mesquite nv and I had a beauty salon in a different country and city and I am trying to figure out what to do I was a sole priority for 2019 and ( ein number)to September 17th 2021 I closed that shop and now I'm in Mesquite nv and opening a new salon but with the same name but I want to form a professional Llc, and do I need to apply for a new ein and LLC also fictions name again then register it too?