LLC or Corporation
Alessandro and Reinaldo asked me how Corporation and Incorporation differ from each other. Assuming my knowledge wouldn’t go that far to answer them, I searched for some decent online explanation. Here’s what I found:
What are the main differences between an LLC and an S-corporation?
An LLC has more operating flexibility and less corporate formalities than a S-corporation. For example, an S-corporation cannot have more than 100 stockholders, must hold periodic director's meetings and must hold an annual meeting of stockholders. However, owners of an S-corporation may be subject to less taxes than owners of an LLC.
What is the difference between a corporation and an LLC?
Corporations are formed pursuant to state law and have shareholders, are managed by a board of directors, and the daily affairs are administered by officers. Similarly, a limited liability company (LLC) has members and may be managed by one or more managers. Most often, both entities must pay franchise taxes, but may have different federal tax liabilities.
Generally, most people form corporations or limited liability companies in order to shield the shareholders or members and officers or managers from personal liability for the debts and obligations of the entity. There may also be various tax advantages to forming these entities which may not be available for sole proprietorships and general partnerships.