LLC vs Corporation: What’s Right for You?
Choosing the right business structure is essential for growth, protection, and tax efficiency. Here’s how LLCs and Corporations compare.
Key Differences Between LLCs and Corporations
LLCs (Limited Liability Companies) and Corporations offer different advantages in terms of structure, taxes, management, and compliance. Use the comparison below to help make an informed decision.
| Feature | LLC | Corporation (C-Corp or S-Corp) |
|---|---|---|
| Formation Simplicity | Simpler and less paperwork | More formal process and structure |
| Taxation | Pass-through taxation by default | C-Corp taxed twice; S-Corp avoids double taxation with IRS approval |
| Ownership | Unlimited members (individuals or entities) | Shareholders; S-Corps limited to 100 U.S. individuals |
| Management | Flexible; member-managed or manager-managed | Structured; governed by board of directors |
| Ongoing Requirements | Fewer formalities, but annual reports still required | More compliance (e.g., annual meetings, corporate minutes) |
| Best For | Freelancers, consultants, small businesses | Startups, investors, companies seeking funding |
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