The main difference between an LLC and a corporation is ownership: an LLC is owned by individuals, while a corporation is owned by shareholders.
Steps to Start an LLC or Corporation
To start either entity, follow these general steps: choose the entity and file paperwork with the state.
- LLCs offer benefits such as limited liability protection and flexibility in management and taxation.
- Corporations provide a predictable structure, perpetual life, and easy transferability of shares.
- LLCs and corporations both offer owners liability protection.
Consider factors like liability, tax needs, and long-term goals when deciding between an LLC and a corporation. Consult a professional for guidance.
Converting from LLC to Corporation
- Converting to a C Corp may offer tax incentives and make it easier to raise capital.
- Convert your LLC into a corporation to simplify stock compensation matters and lower taxes.
- Consult a business accountant and lawyer before converting to ensure a smooth transition.
Remember to factor in the tax implications and benefits when considering a conversion from an LLC to a corporation.