What is the difference between owning a company as LLC, INC, CORP?

Which would be better for an indiviual owner.

9 Answers

Relevance
  • Sam B
    Lv 4
    1 decade ago
    Favorite Answer

    Inc. and a Corporation are the same thing. There are several types of corporation including a LLC, S Corporation and a C Corporation. All have different requirements depending on what level of protection, tax treatment and funding you are interested in.

    The LLC is a type of hybrid business structure that is designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. A popular choice for sole proprietors who are looking to incorporate simply to protect personal assets or secure additional loans, the LLC is thought to be one of the easiest and least expensive forms of ownership to organize. The Limited Liability Company (LLC) is now a recognized business structure in all 50 states plus the District of Columbia. LLCs are gaining popularity with small business owners because they combine the advantages of a corporation with the tax advantages and management flexibility of a partnership

    What are the main advantages of forming an LLC?

    Owners of an LLC have limited liability for business debts.

    For tax purposes, the allocation of profit and loss of an LLC need not be proportional to ownership interests.

    With an LLC, there is no double taxation threat since the LLC is not a separate taxable entity.

    You do not need to be a US citizen to own or invest in an LLC.

    Differences between an LLC and a S Corporation

    It's smart to protect personal assets from business debts and liabilities. Both owners of S Corporations and LLC's enjoy limited personal liability. By contrast, sole proprietors and partners have unlimited personal risk.

    Traditionally, business owners who chose to form an entity to protect personal assets but allow income/losses to be reported on a personal tax return had to create an S Corporation. Today, that can also be accomplished with an LLC. Nolo's Legal Guide for Starting and Running a Small Business states, "For the majority of small businesses, the relative simplicity and flexibility of the LLC make it the better choice. This is especially true if your business will hold property, such as real estate, that's likely to increase in value."

    Both S Corporations and LLCs allow owners to avoid "double taxation" and to pay income taxes on a flow-through basis like sole proprietors and partners. However, LLC's are quickly becoming a preferred entity among small business. Here are some key examples of the benefits of an LLC verses an S Corporation:

    An LLC is simpler and faster to form. It may be formed in one step, while an S Corporation election can only be made after a General Corporation is formed first.

    An LLC is not required to hold annual meetings or to keep formal minutes, while an S Corporation is required to do so.

    LLC members can split profits/losses in any way they choose. In an S Corporation, shareholders must receive dividends according to the number of shares that they own, regardless of the amount of effort put into the business.

    An LLC can be owned by any combination of individuals or business entities. Only United States citizens and resident aliens may own an S Corporation .Other entities generally may not own an S Corporation.

    While many business owners are enjoying the simplicity and flexibility of the LLC, it may not be the best choice in every case:

    If you are professionally licensed and live in California, you may not be able to form an LLC.

    Enticing or compensating employees with stock options or stock bonuses requires forming a corporation since LLC's do not issue stock.

    S Corporation shareholders pay Medicare and Social Security tax only on money received as wages or salary, but not on profits received as dividends or that stay within the company. Under certain conditions, LLC members may need to pay Social Security and Medicare taxes on the entire amount of LLC profits. In particular, LLC's that provide professional services such as health, law or engineering should consult a tax advisor on this issue.

  • 4 years ago

    Difference Between Inc And Llc

  • links
    Lv 4
    4 years ago

    Difference Between Llc And Corporation

  • Anonymous
    5 years ago

    This Site Might Help You.

    RE:

    What is the difference between owning a company as LLC, INC, CORP?

    Which would be better for an indiviual owner.

    Source(s): difference owning company llc corp: https://shortly.im/Ma2W0
  • How do you think about the answers? You can sign in to vote the answer.
  • Anonymous
    1 decade ago

    you can have proprietorships(incorporated) where u are the sole owner, Partnership where you are one of the owners.No of partners is limited by country's company laws. LLc or limited liability company where the owner is a legally formed entity but not a person. The company's capital is formed by share holders, which again is limited by relevant laws.. You can only be a share holder of the company and receive the dividends declared of the profits. It is always easy to form a proprietorship as it gives u full control and rewards. but u are also responsible for all losses personally also. a closely held LLc is also good. It all depends upon the laws of the country and the size and scale of proposed business.

  • 1 decade ago

    LLC means limited liability corp which means owner has limited

    loss if sued can only lose business property not personal. Inc means you have incorporated a business, you can loose personal property if business goes bankrupt incorporate means own company with someone else, say a partner. Corporate means owned by many.

  • 1 decade ago

    inc would be better...llc is limited liability I think and corp is corporation

  • 1 decade ago

    there is no difference. You can use Limited (ltd) also.

    But since corporate law is a State law and not Federal you

    have to check with each State to make sure they allow it.

  • 1 decade ago

    all are corporations, but different ways of looking at them. I don't know exactly, but it has to do with taxes and how you plan on filing them.

Still have questions? Get your answers by asking now.