What Is an LLC? And How Is It Different Than a Corporation?
And one of the initial questions you’ll certainly need to ask is, “What is an LLC, and how does it compare to a Corp?” Then naturally, your next question will be, “So…which one should I set up?”
What is an LLC?
An LLC, or limited liability company, is a legal business entity you form to protect your personal assets from liability. It will also establish how your business income is treated come tax time.
What is a Corporation?
The other most common option is a corporation (aka a Corp or Inc.). Corporations are another business entity that also provides liability protection. But, they are set up a little differently from an LLC.
What are the Differences Between an LLC and a Corp?
Ownership
An LLC is typically either owned by one person or a small group of co-founders. But technically, an LLC doesn’t have “owners”; it has “members.”
What are the Differences Between an LLC and a Corp?
Liability Protection
If you personally get sued, an LLC might be better. Why? If you personally get sued (say from a car accident), and you lose, the suit can take ownership of the stock of your Inc. and consequently control over any assets. Yikes.
What are the Differences Between an LLC and a Corp?
Paperwork
Generally speaking, LLCs indeed have less paperwork, particularly because it doesn’t have to hold “annual meetings” of the directors and take meeting minutes. It also does not have to issue “stock certificates” to its members.
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