Inc Or Llc For Small Business
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FAQ
Two of the most common types are a limited liability company (LLC) and a corporation. They may seem similar at first glance, but in reality, they're designed very differently. The big difference between an LLC and a corporation is that an LLC has one or more owners, while a corporation is owned by shareholders.
Disadvantages of creating an LLC Cost: An LLC usually costs more to form and maintain than a sole proprietorship or general partnership. States charge an initial formation fee. Many states also impose ongoing fees, such as annual report and/or franchise tax fees. Check with your Secretary of State's office.
It is easier to raise capital and implement employee incentive plans, and corporations can deduct some health insurance and fringe benefits. The management structure is well-established in a corporation. In certain states, like California, some tax benefits are available to corporations that aren't available to LLCs.
Both types of entities have the significant legal advantage of helping to protect assets from creditors and providing an extra layer of protection against legal liability. In general, the creation and management of an LLC are much easier and more flexible than that of a corporation.
"LLC" stands for "limited liability company," while the abbreviation "inc." at the end of a company name means the business is a corporation. Both LLC and inc. offer personal liability protection for their owners.