LIMITED LIABILITY COMPANY (LLC)
An LLC is a hybrid form of business entity that has selected features of a partnership and a corporation. It has been structured in a way to benefit from the pass-through taxation feature of a partnership along with allowing flexibility in management and yet have limited liability like in the case of a corporation.
In the U.S., the LLCs laws are governed by individual states but are recognized in all. The “owners” of the company, in the case of LLCs, are referred to as “members.” Usually, a single person can start an LLC and there is no upper ceiling on the number of members.
A corporation is a business or organization that has rights and liabilities separate from those of the individuals involved in forming and running it.
A corporation can be used for different purposes. It may be a nonprofit organization engaged in activities for the public good; a municipal corporation, such as a city or town; or a private corporation, which has been organized to engage in business to make a profit.
In the eyes of the law, a corporation has many of the same rights and responsibilities as a person. The chief advantages are that it can exist indefinitely, beyond the lifetime of any one member or founder, and that it offers its owners the protection of limited personal liability.
Forming and maintaining a corporation involves more steps than forming and maintaining an LLC. The steps to form a corporation would differ depending on each state. Some states, such as Delaware and Nevada, offer additional advantages to the corporations formed there and their shareholders. There is no requirement that a person who forms a corporation in a particular state resides there; one can form a corporation with business interest and legal convenience being the main objective.
Consult one of our experienced corporate attorneys to discuss what type of corporation would best suit your business needs, where to form one, and how to keep corporate records to make sure you are protected from personal liability.