For a small business owner, forming and operating an LLC is simpler and less expensive than a corporation. Both forms of business provide liability protection and tax benefits for the owners; however, a corporation’s taxes are more complicated to prepare and file, as are the reporting requirements for regular board meetings and shareholders. This article outlines the differences between a corporation and an LLC.
An LLC is simpler to form than a corporation. Both require paperwork to be filed with the state’s Secretary of State; however, a corporation is more complex to establish and requires the services of a business lawyer.
A corporation requires board members and share holders. An LLC consists of members who form the business together.
A corporation must hold regular board meetings and submit reports of those meetings. There is no requirement for an LLC to hold regular meetings of its members.
An LLC is not taxed as a separate entity as is a corporation. LLC members pay taxes on their earnings only.
A corporation is managed by its directors, who are elected by the corporations’ shareholders. An LLC’s operation is managed by the members, using a written operation agreement.