Corporation / LLC Formation

LLC or CorporationWhat’s the Difference?

Business organizations (not including sole proprietors) must register as a specific business type with the state in which they do business. All states recognize businesses formed as corporations, limited liability companies (LLCs) or partnerships, or variations of these forms. For a new business, it’s often difficult to know which type of business is the best, considering all factors. This article gives you some information on differences and similarities between LLC and corporation business forms, the two most popular business types.

A limited liability company (LLC) is a hybrid legal entity having certain characteristics of both a corporation and a partnership or sole proprietorship (depending on how many owners there are). An LLC is a type of unincorporated association distinct from a corporation. The primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of pass-through income taxation.[6] It is often more flexible than a corporation, and it is well-suited for companies with a single owner.