How You Can Benefit from a Corporation or LLC
Regardless of their size, all businesses can benefit from incorporating. Advantages of forming a corporation or Limited Liability Company (LLC) include:
- Personal asset protection. Both corporations and LLCs allow owners to separate and protect their personal assets. In a properly structured and managed company, owners should have limited liability for business debts and obligations.
- Additional credibility. Adding "Inc." or "LLC" after your business name can add instant authority. Consumers, vendors, and partners may prefer to do business with an incorporated company.
- Name protection. In most states, other businesses may not file your exact corporate or LLC name in the same state.
- Perpetual existence. Corporations and LLCs continue to exist, even if ownership or management changes. Sole proprietorships and partnerships just end if an owner dies or leaves the business.
- Tax flexibility. Though profit and loss typically pass through an LLC and get reported on the personal income tax returns of owners, an LLC can also elect to be taxed as a corporation. Likewise, a corporation can avoid double taxation of corporate profits and dividends by electing Subchapter S tax status.
- Deductible expenses. Both corporations and LLCs may deduct normal business expenses, like salaries, before they allocate income to owners.
Should My Business Incorporate or Form an LLC?
Corporations and LLCs are both separate legal entities (business structures) that enjoy certain protections under the law and important benefits. Most people form a legal business structure to safeguard their personal assets.
Incorporating, or forming a Limited Liability Company (LLC), allow you to conduct your business without worrying that you might lose your home, car, or personal savings because of a business liability.
Form a corporation or LLC today to protect your personal property and save on taxes.
Decide Which Business Structure is Right for You
Here are the differences between corporations and LLCs in our read more details about all business structures to decide what's right for you.
A Limited Liability Company or a company with limited liability (abbreviated L.L.C. or LLC or W.L.L) is a flexible form of business enterprise that blends elements of partnership and corporate structures. It is a legal form of business entity, in the law of the vast majority of United States jurisdictions, that provides limited liability to its owners. Often incorrectly called a "limited liability corporation" (instead of company), it is a hybrid business entity having certain characteristics of both a corporation and a partnership or sole proprietorship (depending on how many owners there are). An LLC, although a business entity, is a type of unincorporated association and is not a corporation. The primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of pass-through income taxation. It is often more flexible than a corporation and it is well-suited for companies with a single owner.
It is important to understand that limited liability does not imply owners are always fully protected from personal liabilities. Courts can and do pierce the corporate veil of LLCs when some type of fraud or misrepresentation is involved, or under certain situations where the owner uses the company as an "alter ego”
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