Choosing Between LLCs and Corporations: Ideal Entity for Your Business (Inforgraphics)

What is an LLC, What They Are And How They Operated?

A Limited Liability Company (LLC) is a business structure that combines the liability protection of a corporation with the flexibility and tax advantages of a partnership. LLCs are separate legal entities, meaning the owners, known as members, are not personally liable for the company’s debts or liabilities. This structure allows members to protect their personal assets while benefiting from simpler management and fewer compliance requirements compared to corporations. LLCs can be managed by the members themselves or by appointed managers, offering flexibility in day-to-day operations and decision-making.

All throughout the month of October, we’ve been exploring LLCs vs Corporations at MyCorp – even more than we already do! Should a business become an LLC or corporation? Is there a “right” entity to form for your own business? We created an infographic that compares and contrasts the two together to find out.

What is a Corporation: Unveiling the Definition and Functionality

A corporation is a legal entity separate from its owners, providing limited liability protection to its shareholders. This structure means that shareholders are not personally responsible for the corporation’s debts or legal obligations. Corporations can raise capital by issuing stock, making them attractive for growth and investment. They are governed by a board of directors and must adhere to more stringent regulatory and compliance requirements compared to other business structures. This formal structure ensures accountability and transparency in the corporation’s operations, while also offering perpetual existence, meaning the corporation continues to exist even if ownership changes.

Annual limited liability company formations currently outnumber corporate formations 2-1, making the LLC the most common choice for small business. Our infographic dives into the similarities and differences between LLCs vs Corporations. It also takes a closer look at taxation, and providers a 5 step primer to forming your own business. Check out the full length infographic below!

The Bottom Line

Choosing the right business structure between an LLC and a corporation depends on your specific needs and goals. LLCs offer flexibility, fewer compliance requirements, and strong liability protection, making them ideal for small businesses and startups. Corporations, on the other hand, are better suited for businesses aiming to raise significant capital and scale operations due to their ability to issue stock and attract investors. Both structures provide limited liability protection, but they differ in management style, regulatory requirements, and tax treatment. Carefully consider these factors and consult with a legal or business advisor to determine the best entity for your business.

Deborah Sweeney

Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With extensive experience in the field of corporate and intellectual property law, Deborah provides insightful commentary on the benefits of incorporation and trademark registration. Education: Deborah received her Juris Doctor and Master of Business Administration degrees from Pepperdine University, and has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in corporate and intellectual property law. Experience: After becoming a partner at LA-based law firm, Michel & Robinson, she became an in-house attorney for MyCorporation, formerly a division in Intuit. She took the company private in 2009 and after 10 years of entrepreneurship sold the company to Deluxe Corporation. Deborah is also well-recognized for her written work online as a contributing writer with some of the top business and entrepreneurial blogging sites including Forbes, Business Insider, SCORE, and Fox Business, among others. Fun facts/Other pursuits: Originally from Southern California, Deborah enjoys spending time with her husband and two sons, Benjamin and Christopher, and practicing Pilates. Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Deborah, and MyCorporation, have previously been honored by the San Fernando Valley Business Journal’s List of the Valley’s Largest Women-Owned Businesses in 2012. MyCorporation received the Stevie Award for Best Women-Owned Business in 2011.