Choosing between an LLC and a corporation

When you choose to take the next step in your business and join, you are faced with a big decision: Should you form an LLC or a corporation? With either option, you get limited liability protection to protect your personal assets from your business debts and liabilities, as well as various tax advantages. Still, there are big differences between these two types of business entities and your choice will have a huge impact on your business. Here is information to help you choose between the two.

Limited liability company

What is an LLC? An LLC, or limited liability company, is one of the most popular options for small businesses and is basically a transfer entity, but it can also be taxed as a corporation. Many business owners choose to form an LLC because this entity is very flexible; Business income can be transferred to individual members, who pay their share on your tax return, or it can be taxed as a C corporation or an S corporation.

LLCs do not have a specific structure or management that must be met. While most people choose to manage their LLC with members or owners, they can also choose to form an LLC with a Board of Directors. With an LLC, you get limited liability protection, which protects your personal assets if your business is sued or cannot pay its debts.


A corporation is often better suited for a larger company, as there are strict requirements to meet. A corporation must have a central management structure with a Board of Directors. Ownership is also very different since a corporation issues shares, which is the same. A corporation is also required to have regular meetings, maintain and file documents, and keep minutes.

An LLC can choose how they will be taxed, but a corporation will be subject to something called double taxation. This means that business income is taxed at the corporate level and then taxed again when distributed to shareholders.

Choosing between an LLC and a corporation

There is no option that is suitable for all companies. However, as a general rule of thumb, an LLC is better suited to small businesses and startups, as LLCs have fewer requirements and cost less to maintain and form an LLC while enjoying limited liability. Corporations are often better suited for large companies.

The best way to choose between these two entities is with the help of a lawyer, accountants, or a corporate services company, as the decision is based on many factors related to your business, including your risk level, business income, and long-term. . goals.