An S-corporation has many of the same benefits of a C-corporation. The only difference between the two is profits of an S-corporation pass through to shareholders. Shareholders account for business income on their personal tax returns. An S-corporation can offer tax savings because profits are not subject to self-employment tax.
Corporate shares are more easily transferred to family members than partnership interest or assets in a sole proprietorship. An S-corporation also limits the liability of owners. S-corporation shareholders can also receive distributions from the business. This is important as it can reduce pressure to sell the business if there are financial problems.
You will retain control and ownership of the money and account. The POD recipient can only claim the money when you die. To do this, the person will make a claim directly with the bank.
Limited Liability Company (LLC)
The limited liability company is the most popular and flexible option for most small businesses. This fairly new business structure can be an excellent alternative to a corporation or partnership. An LLC is favored by small business owners because it is very flexible without the double taxation of a corporation. Each partner of an LLC has liability protection as with a corporation. This means individual owners are never solely financially responsible for company debt or other members. Owners can still claim business debt against their income on their tax returns.
An LLC can combine tax planning with simple administration, asset protection, and a built-in business succession plan.
Family Limited Partnership (FLP)
A family limited partnership or FLP can provide gradual transfer of ownership while retaining control. This type of entity also offers protection from creditors. An FLP is a limited partnership in which most or all members are family members. This entity transfers your ownership interests to a partnership for general or limited partnership interests.
The owner will retail general partnership interest which can be as little as 1% of assets. General partners run day-to-day operations and make business decisions. Children are holders of LP interests with no control of the business. Because these are noncontrolling interests, they are valued at a discount. This allows greater business portions to be transferred before triggering gift taxes.