LLC vs. Corporation
Incorporating or forming an LLC offers many similar benefits, but there are also
several key differences that are important to understand and consider in choosing
the right structure for your specific business activity.
CorpNet® can help: Whether you choose to incorporate
or form an LLC, CorpNet® can help you complete the process saving you both time
and money with service that is fast, reliable and affordable… And remember,
our services are backed by a 100% satisfaction guarantee. We make everything
easy for you so that you can focus on what you do best – running your business!
Compare a corporation vs an LLC below:
- Limited Personal Liability
Both structures limit liability to the amount shareholders or members invest in
the company. Therefore personal assets, including homes, cars, savings and investments,
are protected from the liabilities and risks of the business.
- Ability to Raise Capital
Both structures allow a business to borrow money and sell equity to raise capital.
- Unlimited Duration
Both structures continue indefinitely, unless they are dissolved.
- Tax Flexibility and Profit Distribution
LLC’s provide pass through tax treatment and avoid an entity level tax. This
means that an LLC is not a separately taxable entity and business income or losses
are reported on the individual tax returns of the owners. This is similar to an
S Corporation, but different from a C Corporation, which is a separate taxable entity.
For those LLC owners who wish to be taxed as a corporation, however, they may elect
such tax treatment by making a filing with the IRS.
Another advantage of an LLC over a corporation is the ability to allocate profits
and losses among the members as the members agree, while in corporations dividends
can only be paid pro rata according to share ownership. The IRS allows for special
allocations for LLCs and we recommend consulting your accountant or tax advisor
to learn more about this option.
- Corporate Structure & Formalities
An LLC generally requires less corporate formalities than a corporation. LLC’s
may be managed directly by members; there is no need to have a separate board of
directors or annual shareholder meetings and periodic directors meetings with minutes.
For many, the convenience and simplicity of forming a single-member LLC that is
managed by the member provides the limited liability protection without adding a
lot of corporate bureaucracy.
- State Filings
LLC’s do still require State Filings, though they are different from those
for Corporations. Articles of Organization must be filed with the Secretary of State
to form an LLC and the members of the LLC are required to enter into an Operating
Agreement that governs how the LLC will be operated.
- Number of Owners
Both Corporations and LLCs can have multiple owners, but there are differences in
how many. LLCs and C Corporations can have an unlimited number, while S Corporations
are limited to 100 Shareholders.
Our fees for incorporating or forming an LLC start at $49, plus state filing fees. This
is substantially lower than what an attorney might charge for the same service. Relative
to other online document filing services, CorpNet® stands out above the rest. It
is a privately owned company whose founders are both attorneys. They are well
supported by an experienced staff of document specialists, who collectively, have
filed over a hundred thousand documents in recent years. CorpNet® also
offers a 100% satisfaction guarantee.