Incorporation vs LLC
The question is what is the best choice for your business? Form a corporation or an LLC? In order to determine which is right for your goals, let's look at the similarities and differences between the two.
The main similarities between LLCs and corporations are:
- Both Incorporation and LLC are legal entities created by a state filing
- Both Incorporation and LLC help protect personal assets from your business liabilities
- Both Incorporation and LLC have few ownership restrictions
The main differences between LLCs and corporations:
- Corporations issue stock and are owned via stock. An LLC does not issue stock.
Like partnerships, an Limited Liability Company is simply owned by the members and/or the managers of the company.
- Corporations are required to hold annual meetings and to keep written minutes. An LLC does not have this requirement, resulting in less official paperwork.
- An Incorporation is a taxable entity, and they must pay taxes on their profits at the corporate tax rate. An LLC, like a sole proprietor, partnership and
S Corporation, is a "pass-through" tax entity. This means that the profit or loss generated by the business is reflected on the personal income tax return of the owners, thus avoiding the double taxation of paying first corporate tax on profits and then personal income tax on distributions of profits.
Just remember that whether you're considering a corporation or an LLC, it
is very important to form a business entity that protects your personal assets
and your family.
Who Can Form a LLC?
Because of their flexibility and relative simplicity, the LLC is well suited
for both start-up businesses and more mature businesses. LLCs have been gaining
speed in recent years. In fact, new LLC formations now out-number new corporation
formations in several states. LLCs have several "ease of use" advantages. Also,
as the needs of your company changes, the existing business structure can be
amended or a new business structure can be formed quickly, easily and affordably.
Costs to Consider
Online LLCs can cost from $100 to $500 plus
state fees depending on the depth of scope of the package you choose. The basic
package that online services offer will most likely cover all the fundamentals
you will need . Some extras found in "gold" or premium packages may include
but are not limited to a prepared application for your Tax Identification Number
, name search and registration and rush service . The same basic services from
an attorney can cost upwards of $1000.
How Long Will This Take?
You can expect to spend 20 to 30 minutes filling out forms if creating an
LLC online. Most services will allow you save your work and come back later
so all the information does not have to be inputted in one sitting. An LLC
will usually take 20 to 35 days to form after the articles are filed depending
on the state. Your final package is then sent to you shortly thereafter.
Limited Liability Corporations Fast, Easy and Smart
Many companies that offer online LLCs provide their clients with a 100% satisfaction
guarantee on their services, available customer service and legal document
reviewers that examine your information for completeness and other common errors.
Just as each LLC is unique, the diversity of services offered by online companies
is immense. For a complete listing of reviewed sites that offer LLCs online
and how they compare as far as ease of use, price, specific services offered
and customer service please see below.