|
Corporations |
Limited liability Companies |
No. of Shareholder/ Member |
At least 1 Shareholder |
At least 1 Member |
No. of Director |
1 |
N/A |
Characteristics |
1. Corporations are intended to provide limited liability; shareholders are generally not individually liable for the debts and obligations of the company. 2. Corporations are assessed corporate taxes on their own profits. Shareholders are taxed separately, if the company distributes dividends to them (or if it pays them a salary, in the case of employee owners). 3. Corporations are allowed to keep $250,000 in retained earnings without accumulated earnings tax. |
1. LLCs are intended to provide limited liability for founders; moving liability for debts and obligations of the business from the entrepreneurs into the company itself. 2. LLCs offer pass-through taxation, the LLC's owners generally pay personal income taxes on the income of the business. |
Disadvantages |
Double Taxation |
An LLC cannot go public and be converted to a tradable stock company, and it can be more difficult to raise capital as a result. |
|
Corporations |
Limited liability Companies |
Registration Procedure |
1. Name your
Corporation;
5. File Statement
of Information within 90 days after registration; |
1. Name availability checking; |
Company Annual Renewal |
Required |
Required |
|
Corporations |
Limited liability Companies |
Federal Income Tax |
Form 1120; 21% |
Form 1065; For information only |
California State Franchise or Income Tax / Annual Tax |
Form 100; |
Form FTB 3522 |
LLC Fee |
N/A |
If your LLC will make more than $250,000, you will have to pay a fee. LLCs must estimate and pay the fee by the 15th day of the 6th month, of the current tax year. |
|
Corporations |
Limited liability Companies |
Withholding Tax |
Form 1042-S; Required if the entity withheld tax at 30%. The 30% maybe reduced if there is a treaty between US and the member's/shareholder's country. |
Form 8805; Foreign member as individual withholding rate is 37%. The individual can file individual tax return to claim refund for excess tax. |
Federal Income Tax |
Form 1040-NR; Dividend shall be taxed as income not effectively connected with a U.S. trade or business, the tax rate is 30%. The 30% maybe reduced if there is a treaty between US and the member's/shareholder's country. Since net profit has already been levied 21% as income tax in business level, the dividend income tax is second level income tax, which is known as double-taxation. |
Form 1040-NR; All the LLC net profit will be passed through to the foreign individual and levy individual income tax, the rate is 10%, -37%. |
Self-Employed Tax |
N/A |
Foreigner do not subject to self-employment tax. |
California State Income Tax |
Form 540NR (CA non-residents); California non-residents need to pay income tax on their California source income. The tax rates range from 1%-13.3%, depending on their California State adjusted gross income. |
Form 540NR (CA non-residents); California non-residents need to pay income tax on their California source income. The tax rates range from 1%-13.3%, depending on their California State adjusted gross income. |
Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage. |