Starting a Corporation vs. an LLC

Starting a Corporation vs LLC

When you start your own business, you can find yourself facing an overwhelming number of decisions. From the seemingly minor–where to print your business cards–to the more marquee decisions, like who you hire, your day can quickly become consumed by an endless series of choices. One of the more important matters that you will need to decide on, ultimately, is how you will legally structure your business. For many, forming a Limited Liability Company (LLC) is the most logical maneuver. Other businesses, however, have different needs and goals and may find that forming a corporation makes more sense. If you are unsure about how to proceed with your organization, you may want to thoroughly understand the differences between starting a corporation vs. an LLC.

In the business world, the right path for one is not necessarily the right path for all. It is also worth noting that just because you form an LLC today, you are not precluded from submitting Articles of Incorporation down the road. Regardless of which structure you land on, Corporation Center can help. We have streamlined web forms that you can use to create LLCs or corporations in all 50 states.

Starting a Corporation vs. an LLC: Key Differences

Limited Liability Companies and Corporations have similarities and differences. The largest distinction between the two entities is that corporations are owned by shareholders, while LLCs are owned by members. As a corporation has the ability to issue stock (hence, shareholders), it can also generate capital with relative ease. This comes in contrast to LLCs, which typically require outside investors to be brought in as members. This can cause logistical and paperwork headaches.

There are also tax considerations to think about. In a Limited Liability Company, you get to enjoy “pass-through” status with the Internal Revenue Service (IRS). This means that the profits made by your business are not taxed until they pass through to the members of your LLC, who then pay taxes on their salaries. In some corporate structures, both profits and shareholder income are taxed, effectively creating “double” taxation.

There are additional differences worth considering as well. Corporations are fairly rigid in how they can be managed, while LLCs have quite a bit more flexibility. LLCs are also subject to less stringent reporting requirements than corporations. As a general rule of thumb, the fact that corporations are accountable to their shareholders is often cause for more rules to be adhered to.

Starting a Corporation vs LLC

Create Your Business Online Today

Whether you are interested in creating a Limited Liability Company, an S- or C-Corporation, or a Limited Liability Partnership, we can help. At Corporation Center, we designed our business with the entrepreneur in mind. By utilizing our easy-to-navigate web forms, you can draw up your Articles of Incorporation or Articles of Organization in just a matter of minutes. If you would like to learn more about the services that we provide, please contact one of our helpful customer service representatives by email or phone today. You can also browse our thorough FAQ page to learn additional information.