Top 5 Differences Between LLCs and Inc.

A limited liability company and a corporation are different ways of achieving the same thing - running and eventually growing a successful business operation. But there are significant difference between these two entities, and here are the top 5 differences:

1. Legal Structure: LLC stands for Limited Liability Company while Inc stands for Corporation. LLC is a hybrid structure that combines the characteristics of a partnership and a corporation, while a corporation is a separate legal entity from its owners.

2. Ownership and Management: LLCs are typically owned and managed by their members, while corporations are owned by shareholders and managed by a board of directors.

3. Taxation: LLCs are taxed as pass-through entities, meaning that the profits and losses of the business are passed through to the owners and reported on their personal tax returns. In contrast, corporations are taxed as separate entities, with profits and losses taxed at the corporate level and again at the individual level when distributed to shareholders as dividends.

4. Liability Protection: Both LLCs and corporations provide liability protection to their owners, but the extent of the protection may differ. LLCs offer limited liability protection to their members, which means that their personal assets are generally protected from the debts and liabilities of the business. Corporations offer more robust liability protection, with shareholders generally not being personally liable for the debts and liabilities of the corporation.

5. Formalities and Record-Keeping: LLCs generally have fewer formalities and record-keeping requirements than corporations. For example, LLCs are not required to hold annual meetings or maintain detailed corporate records. Corporations, on the other hand, are required to hold annual shareholder meetings and maintain detailed corporate records, among other requirements.

Every situation is different and you should not leave it up to a computer program or random luck to decide which type of business entity is right for you.