The Differences Between a Corporation and an LLC | Micro ...

by Guest on April 23, 2012

This guest blog is brought to you courtesy of The Company Corporation.

Business owners may choose from a variety of company structures, based on their needs and preferences, and with the advent of the Limited Liability Company (LLC), the choices for small businesses are wider and better than ever before. Therefore, it is important for small business owners to consider and understand the advantages of both a corporation and an LLC when forming a new company. Selecting the right structure can help you maximize your chances for success.

So, what is a corporation? A general corporation, also known as a ?C? corporation, is the most common corporate structure. A general corporation may have an unlimited number of stockholders and it provides limited liability for directors, officers, shareholders and employees.? Also, corporations provide perpetual existence, even if the owners leave the company. There may be certain tax advantages like tax deductible expenses when forming a corporation.

Another option for business owners that has become very popular is to form a Limited Liability Company (LLC).? The LLC is not a corporation, but it offers many of the same advantages. Many small business owners and entrepreneurs prefer LLCs because they combine the limited liability protection of a corporation with the ?pass through?" taxation of a sole proprietorship or partnership.

To help make it a little easier to compare a corporation to an LLC, the chart below gives a snapshot of the advantages and disadvantages of both:

Advantages of an LLC	Advantages of a Corporation
no limit on the number of owners profit and loss are passed through to the owners? individual tax returns no annual meeting or minute book requirements	may issue shares of stock to attract investors corporate income splitting may help lower overall tax liability
Disadvantages of an LLC	Disadvantages of a Corporation
cannot engage in corporate income splitting to lower tax liability cannot issue stock	double taxation of corporate profits and shareholder dividends must hold annual meetings and record minutes S Corporations have restrictions on number of owners

Every business is unique with different needs.? The legal structure that works best for your neighbor?s business may not be the best for yours.? Take the time to understand the difference in legal structures before you incorporate your business.

Join The Company Corporation for a complimentary webinar on Thursday, May 3rd, 2012 at 12:00 PM Eastern Time to learn more about incorporating your business.

Image: Victor1558

Tagged as: corporation, incorporating your business, LLC

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