LLC vs. Incorporation | MyCorporation®

The difference between an LLC and a corporation can be complicated when looking at the fine details of both legal entities. These fine details can sometimes be the deciding factor in choosing to become an LLC or a corporation. You may want to seek the advice of a lawyer or accountant (be warned, not all lawyers and accountants will be up to date with all LLC laws) to help you decide what business entity would best suit your needs. However, for many businesses, these fine details will not be a factor in deciding to become an LLC or a corporation, and so let’s look at the general differences between an LLC and a corporation. Legal entity vs tax entity Before going any further, a distinction between a legal entity (LLC v. corporation) and a tax entity (sole proprietor / partnership vs. C-corporation v. S-corporation) must be made. Often, new entrepreneurs get these two concepts mixed up and will end up unnecessarily confused. A tax entity classification is simply the way the IRS (and the state taxing board) sees the business. The legal entity classification is how everybody else (i.e. courts, state, contractual partners) sees the business. A corporation (legal entity) will be given a corporation (C-corp or S-corp) designation as a tax entity. However, an LLC (legal entity) has a choice on what tax identity it wants to have. An LLC can be seen as a sole proprietor / partnership, or as a C-corp, or as an S-corp (there is no true LLC tax entity and so an LLC is seen as one of the traditional business designations instead). In this sense, an LLC has greater flexibility and can choose the tax identity that most benefits its members. With this in mind, here are the major differences:

Source: LLC vs. Incorporation | MyCorporation®


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About Stephen G. Barr, Group Publisher

Author, Syndicated Columnist, Editor In-Chief and Group Publisher at SGB Media Group, a social media marketing firm specializing in digital media content production, publishing, affiliate marketing, public relations and advertising. Over 25 years experience in retailing, advertising, website & online forum development, niche social networking, affiliate marketing, search optimization, branding and identity, site location, non-profit fund raising. Event planning, promotion, production and MC/Host at public events. Author, Editor & Publisher of 35 syndicated, digital publications utilizing multiple digital distribution channels in conjunction with launching and administrating national advertising campaigns for major Fortune 500 advertisers in partnership with Google, Ning, Facebook, Myspace, Yahoo, DoubleClick, LinkShare, PepperJam and other industry leading third party affiliate networks. Product development team member from conception to launch on many websites, tangible goods and organizational structure for start ups. Specialties: Public relations, retailing, advertising, website & online forum development, niche social networking, blogging, email campaigns, affiliate/performance marketing, search optimization, branding and identity, site location, event production & promotion, non-profit fund raising and tasteful, responsible adult content publishing. An internationally recognized and read social media columnist & pundit on The Examiner, Associate Content, Vator.tv, X-Biz.net and Technorati and his own affiliated sites.
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