Choosing the right entity type for your business is one of the most important decisions you’ll make when starting a company. This choice will impact how your company is run, how the profits are shared, how you pay taxes, and so much more.
Many business owners and investors find themselves deciding between two options—LLC or corporation.
But which one is right for you and your business?
This guide will take a closer look at the similarities and key differences between LLCs and corporations. We’ll also highlight the pros and cons to help you compare your options and make an informed decision.
What is an LLC?
A limited liability company—or LLC—is a legal business entity formed at the state level. This business structure provides personal liability protection to owners (hence the name) while simultaneously offering the pass-through taxation benefits of a sole proprietorship.
In terms of ownership, management structure, and taxation, LLCs are extremely flexible. One or more people can own an LLC, and the owners are known as “members.”
When an LLC is formed, the acronym (or an accepted alternative) is included in your official business name (e.g., Joe’s Flower Shop LLC, Joe’s Flower Shop Ltd, Joe’s Flower Shop Limited Liability Co., etc.).
Types of LLCs
Not every LLC is the same. There are several different types of LLCs that you can form, based on factors like ownership, location, profession, and more.
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