LLC vs. Corporation

There are some similarities and differences when one examines an LLC vs corporation. In both cases, the company will likely have limited liability in financial and legal issues, but the liability may vary. In addition, an LLC and a corporation may both have multiple owners, shareholders or employees, but an LLC could have just one individual as a sole proprietor.

An LLC vs corporation also includes a very significant difference in the formation of the entity. Although LLC stands for limited liability corporation, it is not a corporation in the true sense of the word. The structure of the LLC will vary significantly from a corporation, as the operating agreement will clearly show. The LLC is not, in fact, an incorporated entity and is taxed differently than a corporation.

In addition, an LLC can include a single individual owner with no additional employees. The single individual would still have an operating agreement to prove that the individual is separate from the entity of the LLC, but they would be responsible for all of the day to day operations of the company, as well as the financial responsibilities. However, the nature of the LLC protects that single individual from liability, whether financial or legal, should issues arise.

Each type of corporation is taxed differently by the Federal Government, as well as their local tax jurisdiction. For example, some corporations are taxed on profit only one time, while others are taxed twice. LLCs are taxed differently than either type of corporation.