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Corporation vs. Limited Liability Company
Compare:
- When to use
- State filing & filing fees required for creation
- Ongoing state filings and fees
- Length of existence
- Administrative requirements & ongoing formalities
- Who manages the business
- Liability protection
- Raising capital
- Taxation
- Self employment tax
- Interest transferability
Corporation
- Own a business, publicly traded company, to take advantage of lower corporate taxes compared to individual income taxes, to deduct medical expenses.
- Articles of incorporation must be filed with the Secretary of State and necessary filing fees paid.
- An annual report is due every year.
- The entity may live forever without interruption by death of shareholders, directors, or officers.
- To maintain corporate status, ongoing formalities include:
Adopt and maintain bylaws
Hold and document initial and annual meetings of directors and shareholders
Issue stock
Record stock transfers - Managed by shareholder elected directors and officers.
- Owners typically are not personally responsible for business debts and liabilities.
- May borrow money, issue bonds, sell common and preferred stock, enter into investment contracts
- Generally taxed as a "C" corporation. Shareholders are subject to double taxation. No self-employment income tax on distributions.
- Salary subject to self employment tax.
- The assets may be sold, transferred, pledged, or mortgaged simply by using stock
LLC
- To own real estate. To hold cash for asset protection. To own stock in one's corporations.
- Articles of organization must be filed with the Secretary of State and necessary filing fees paid.
- An annual report is due every year.
- May designate any period of duration.
- To maintain LLC status, ongoing formalities include:
Operating agreement
Hold and document initial and annual meetings of members and/or managers
Issue stock
Record stock transfers - LLCs have an operating agreement that outlines the management of the business. Can be member-managed or manager-managed.
- Owners typically are not personally responsible for business debts and liabilities.
- May have any number of investors.
- Generally treated as a partnership or sole proprietorship. Subject to one level of tax. May be taxed as a "C" or "S" corporation. Distributions may be subject to self-employment income tax.
- Salary subject to self employment tax.
- Limited transfer of interest - an investment is illiquid since all members must vote to transfer a member’s interest
Got questions?
Email us at agents@mywyomingllc.com or call toll free today (877) 239-2608