Whats the difference between llc and corp

Difference Between Corporation vs LLC

While one is trying to decide between business types that he wants to incorporate, most business owners will get perplexed between Corporation vs LLC. The latter will combine 2 kinds of business, are a corporation and partnership. On the other hand, the former would mean Incorporated (Inc), representing the form of a corporation, such as C Corp or S corp. A Corporation and limited liability company (i.e., LLC) are 2 different company structures with unique tax requirements. It will not matter which entity type one will choose because being incorporated will add legitimacy to one’s business, specifically how one’s business will be perceived in the market.

A limited liability company (i.e., LLC) is a form of business structure that offers protection via personal liability and a few tax benefits. The “LL,” or say the limited liability, in the term LLC, is what will protect one’s personal assets in the event of judgment going against one’s company. Traditional corporations further do offer limited liability, which should be noted well. On the other hand, Corporation is an artificial person who is a separate legal entity that is treated independently of its members (also called as shareholders), having its own obligations and rights, perpetual succession, limited liability, and does hold property in its own brand name.

Head to Head Comparison Between Corporation vs LLC (Infographics)

Below is the top 8 difference between Corporation vs LLC :

Key Differences Between Corporation vs LLC

Both Corporation vs LLC are popular choices in the market.

Let us discuss some of the significant differences Between corporations vs LLC :

• A private company that will merge the combined features of a partnership firm or the corporation is called Limited Liability Company or LLC. On the other hand, Inc. is an acronym that will be used for the term “Incorporated” and is also used as a suffix in the corporations’ brand name, which denotes a business entity registered under the statute of the law.
• An LLC can be termed as a privately held corporation, but a corporation, on the other hand, is a publicly-traded corporation.
• The Limited Liability Company owners are the members, whereas the shareholders are the corporation’s ultimate owners.
• LLC will offer more flexibility than a corporation. There is no bar or limit on the maximum number of members in a Limited Liability Company. On the other hand, an S Corp., a type of corporation, can have only a hundred members.
• A corporation is subject to stringent record-keeping and legal formalities. However, when one comes to a Limited Liability Company, the record-keeping and the legal formalities are lenient.
• The best and the key feature of LLC is pass-through taxation; as stated earlier, the LLC’s income will be taxable in the hands of its owners’ post distribution. On the contrary, a corporation will have to face double taxation. First, it will be taxed at the corporate level and then at an individual level, when the income or the profit is distributed to shareholders of the corporation as the dividend.
• The annual reports of a corporation should be submitted timely to the appropriate authority as per the law’s requirements. Unlike a corporation, LLC wherein the filing of annual reports or annual financial statements with the appropriate authority is not required.
• The Annual General Meeting (i.e., AGM) should compulsorily and mandatorily be held by a Corporation that is Incorporated. As against this, the holding of an AGM is not mandatory for an LLC or Limited Liability Company.

Corporation vs LLC Comparison Table

Let’s look at the top Comparison between Corporation vs LLC:

Conclusion

Corporation vs LLC both offers their unique benefits and certain similarities. Both Corporation vs LLC provide limited liability protection as every coin has 2 sides, including corporation and LLC. In an LLC, there is no limit on the count of members; the business income or profit will pass through the member’s personal income tax return. Further, it cannot issue common stock to raise the required funds from the marketplace. To the contrary, corporations will be authorized to make the public issue (i.e. IPO) and the splitting of corporate income that lessens overall tax liability. Still, the cascading effect is present in the taxation of such legal entities.

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