What is the difference between self-employed and a corporation?

Answer 1

Self-employed is when you have a business license in your name or in a business name. If you provide a service (you get a license at the court house for less than $50.00 probably) The simplest way to document your position is this method. Your tax number falls to your Social Security Number. Or some say "I'm Independent", which has the utmost risk in freelance work. There you will run into questions like are you insured? Employers you negotiate your work from or home owners want to know who is liable. Your references are your reputation. Second, if you sell something it falls into a different category. Find out details the same place at the courthouse. Corporations are filed as an entity separate from you. Concerning liability and credit, it is not you; it is Corporate. Corporations give individuals legal protections against laws; and fall under different tax laws and shelters at different levels of income. Your Corporate tax number is assigned to the entity. Individual income and other taxes then fall under your social Security Number. When you employ over 3 people (I'm not sure if that is strictly Federal) you must carry Workers Compensation Insurance. That can be the breaking of a small Corporation $2,000.00- $5.000.00 a fiscal quarter hurts when you are trying to build a business. It is the hump small business face now. Planning and execution is needed. I have seen this in action. Your local courthouse will assist you in the business licensing office. You may want to look up these terms in the encyclopedia - Self-employed, independent, incorporate, business license.

Answer 2

"Company" is often an abbreviation term for "limited liability company", although the term "company" can be meant to be synonymous to "corporation".

Differences between limited liability companies and corporations

A limited liability company differs from a corporation as a commercial entity structure to the extent of

(1) its complexity and structure; and

(2) the tax law implications accruing to it (LLCs can enjoy pass-through taxation directly to the LLC members, while a corporation itself has a taxable existence, and the shareholders can also be taxed as to their ownership interests).

Corporations are generally more formalized and more structured than LLCs.

Similarities betweel limited liability companies and corporations

Limited liability companies and corporations both enjoy liability limitation. Both LLCs and corporations are subject to State corporations and commercial law in the form of both State statutes and the common law.

Corporations

Corporations are chartered through

(1) articles of incorporation; and,

(2) bylaws.

Corporations issue shares to imbue individuals and entities with property interests in the corporation. Directors, management and shareholders accrue both benefits of ownership in, and duties, fiduciary and otherwise, to the corporation, and thus potential liability to it, but not generally, for it.

A corporation is controlled by a board of directors, which particularly appoints the corporation's management and management structure. The board is, in turn, responsible and accountable to the shareholders, who vote their shares as to the board.

Limited liability companies

LLCs were created much more recently to provide a more simplified commercial entity structure. A LLC can exist with as little as one filing with a state corporations bureau and the filing of a simple annual report. A LLC has members, who are legally tied to the LLC and enjoy

(1) liability limitation as a result; and

(2) the simplification of the application of tax law to their membership in the LLC.

Instead of having an enduring property interest in a corporation entity in the form of corporate shares, LLC members typically receive distributions from the assets of the LLC. Members can and should have member agreements among themselves and between the members and the LLC to determine the nature of these, among other things. Members appoint management to the LLC, which need not be members of the LLC. Corporations, individuals, partnerships and non-profit corporations can be members in a LLC.