I am in the process of starting my own company. I plan to be the only
employee and offer consulting services. I would liketo know if I
should incorporate (C Corp) or form a LLC. I would like to know the
financial advantages of both as well, including details such as if I
wanted a credit card for the business, with an LLC would it be
guarenteed personnaly?

Age old question. The INC you are referring to is probably a
C-Corporation. Another corporate form that comes up in this decision
is the S-Corp. Most of the literature you find on this topic covers
C-Corps, S-Corps, and LLCs. (Incidentally, you must first incorporate
as a C-Corp before becoming an S-Corp. You can then file an election
for S-Corp.)

There are basically two considerations here: tax and personal
liability. A C-corp is going to have its profits taxed at the
corporate level and again at the individual level. Sounds harsh, but
it's not necessarily as rough as it sounds; depends on your situation.
Both S-Corps and LLC have what amounts to pass-through taxation,
meaning that profits are only taxed at the individual level.

Liability is relatively good in all three cases, but is best in
C-Corps. The reason is that case law on LLCs varies from state to
state ... lack of consistency in what will actually happen under a
given situation. C-Corps have been around for ages and don't suffer
that problem.

By the way, some states don't allow single member LLCs. If you're in
one of those states then an LLC may not even be an option for you.

LLCs and S-Corps may start to look alike at this point. One big
difference is that S-Corps can only have one class of stock while LLCs
can have multiple. This is worth noting if you ever plan on bringing
other people on board. A second gotcha is that an S-Corp can't have
shareholders that are other corporations (or even partnerships), which
is a real problem for some types of business.

READ THIS: Okay, regardless of what you choose, you absolutely must
"act" like a corporation if you incoroprate. That means no mingling of
personal and company assets, you have to keep minutes of meetings,
etc. The point being that if you end up in court and some attorney
crawls through your affairs and determines you only filed as a C-Corp
for the personal liability protection, yet acted as a sole proprietor
in every other way, then your personal assets will be up for grabs.
That's exactly what you don't want to happen.

RECOMMENDATION: I hate giving this answer, but it really does depend.
If you are going to be a real-estate developer or something, LLCs can
be nice. You need investors and you want to "dumb down" their control
by issuing more restrictive shares, for example. S-Corps don't allow
that. C-Corps can be painful because of double taxation, but may not
be so bad if revenues are low for a while.

Here are some links that will help educate you:
General info: 
http://www.enitia.com/corporateform.php

Arizona site, but the info seems fairly general in my opinion. Good chart:
http://www.keytlaw.com/az/entities/entitychart.htm

IRS comments on LLCs. Mentions restrictions:
http://www.irs.gov/businesses/small/article/0,,id=98277,00.html


I hope this answers your question. Let me know if there is something I'm missing.

Forming a corporation is an important step for small business owners,
and taking this step has many possible benefits for the business and
its owners (who are also called shareholders). These benefits are, in
many cases, unavailable to sole proprietorships and general
partnerships.

Incorporation benefits include:

Limited Liability - Corporations provide limited liability protection
to its owners. Typically, the owners are not personally responsible
for the debts and liabilities of the business; thus, creditors cannot
pursue owners? personal assets (such as a house or car) to pay
business debts. Conversely, in a sole proprietorship or general
partnership, owners and the business are legally considered the same
and personal assets can be used to pay business debts.

Tax Advantages - Corporations often gain tax advantages such as: the
deductibility of health insurance premiums paid on behalf of an
owner-employee; savings on self-employment taxes, as corporate income
is not subject to Social Security, Workers Compensation and Medicare
taxes; and the deductibility of other expenses such as life insurance.
For information on the types of tax advantages your business may gain
by forming as a corporation, please speak with an accountant or tax
advisor.

Establishing Credibility - Incorporating may help a new business
establish credibility with potential customers, employees, vendors,
and partners.

Unlimited Life - A corporation?s life is not dependent upon its
owners. A corporation possesses the feature of unlimited life, meaning
if an owner dies or wishes to sell his or her interest, the
corporation will continue to exist and do business.

Transferability of Ownership - Ownership in a corporation is typically
easily transferable. (However, there are restrictions on S corporation
ownership.)

Raising Capital - Capital can be raised more easily through the sale
of stock. Additionally, many banks, when providing a small business
loan, want the borrower to be an incorporated business.

Retirement plans - Retirement funds and qualified retirements plans,
such as a 401(k), may be established more easily.

_____________________________________________________________________________


Forming a limited liability company (LLC) is an important step for
small business owners, and taking this step has many possible benefits
for the business and its owners (who are also called members or
managers). These benefits are, in many cases, unavailable to sole
proprietorships and general partnerships.

Advantages of LLC formation include:

Limited Liability - LLCs provide limited liability protection to its
owners. Typically, the owners are not personally responsible for the
debts and liabilities of the business; thus, creditors cannot pursue
owners? personal assets (such as a house or car) to pay business
debts. Conversely, in a sole proprietorship or general partnership,
owners and the business are legally considered the same and personal
assets can be used to pay business debts.

Pass-through Taxation - LLCs typically do not pay taxes at the
business level. Any business income or loss is "passed-through" to the
owners and reported on the owners? personal income tax returns. Any
tax due is then paid at the individual level.

Establishing Credibility - Forming an LLC may help a new business
establish credibility with potential customers, employees, vendors,
and partners.

Fewer Ongoing Requirements - LLCs face fewer state-imposed annual
requirements and ongoing formalities than do corporations.

Organizational Structure - LLCs are free to establish any
organizational structure agreed upon by the owners.

Few Ownership Restrictions - There are few restrictions on who can be
an owner of an LLC or how many owners an LLC may have, unlike S
corporations.

hope you will find this information usefull,
Robert Z