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Money Matters | Learn More About LLC

Is an LLC the Same Thing as a Corporation?

Entrepreneurs and business owners have several options when it comes to forming business organizations: partnerships, corporations, sole proprietorship and a limited liability company, or LLC. In all 50 states, LLCs are authorized, and they have similarities and differences between a traditional corporation.

How an LLC is Similar to a Corporation

The initial formation of both corporations and LLCs is straightforward and both are created under state law. With both, the personal assets of owners are safe from creditors and owners are only liable for company debts as far as their capital contributions go. Both limit liability on the part of the owner and allow them to separate personal life and assets from business life.

How an LLC is Different Than a Corporation

When a corporation is created, there must be shareholder meetings, issued stock, a board of directors appointed, and minutes compiled of meetings. For an LLC, none of this is required. LLCs also function under more flexible state laws when it comes to operation and structure.

LLCs can receive the following types of tax treatment:

·         One-member LLC
·         Multi-member LLC
·         C corporation
·         S corporation

Corporations must fall under the S corporation or the C corporation type of tax treatment. Corporate income rates are charged, and shareholders are taxed again on dividends.

LLCs are still fairly new in the world of business formation, so it may be harder to raise funds or come up with cash for further growth. Corporations can raise money easily because lenders can guarantee debt more extensively. If you want to eventually have your company go public and issue shares to members of the general population, an LLC is not a good idea.

Which Option Is Right for You?

Gov Doc Filing makes it easy to set up any business in the ideal way. With an easy, step by step LLC application, entrepreneurs can separate personal assets from business assets and enjoy greater protection from debts. Contact them today to learn more!

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