The Difference Between Corporation and LLC

Both corporation and LLC are business entities. They differ from hugely from each other. The corporation and LLC both are types of businesses. These both have an owner and both earn a revenue. The difference between Corporation and LLC is in the legal rights, tax return, and type of owners. To learn more about their differences, read the article below.

Difference Between Corporation and LLC

Corporation

A corporation is a business that is owned by a group of people. The business is recognized by the law enforcements and the group of people who own the business and is considered as one entity. Corporations can enjoy legal rights and they can sue individual or companies. They are answerable to the people and they can be sued upon as well. A corporation can be dissolved if ordered by the government. Corporations are owned by stake-holders.

There are four main types of corporations

  1. Profitable corporations: corporations that are for the profit are called profitable corporations
  2. Non-profitable corporations: similarly these are corporations that are not for the profit.
  3. Stock corporations: corporations that have the capability to issue stock are called stock corporations.
  4. Non-stock corporations: corporations that don’t have the capability to issue stock are non-stock corporations.

LLC

LLC is an abbreviation for Limited Liability Company. It is a type of private companies that are owned by one or few people. It follows business structure that combines flow through income taxation. An LLC is a sole proprietor ship or partnership type of business. This type of business avoids double taxation unlike corporations that have double taxations. An LLC cannot issue stock.

LLC is more flexible than corporation. It is also best for sole proprietorship. It is hard to pull in investors for LLC. However, it is relatively easy in corporations. LLC can attract more investors if they turn into a corporation.

Corporation VS. LLC

  1. A corporation is a business that is owned by a group of people. While LLC is a type of private companies that are owned by one or few people.
  2. LLC follows business structure that combines flow through income taxation. Whereas Corporation is recognized by the law enforcements and the group of people who own the business and is considered as one entity.
  3. LLC is more flexible than corporation. It is also best for sole proprietorship. It is hard to pull in investors for LLC. While corporations can enjoy legal rights and they can sue individual or companies.

Full Comparison Between Corporation VS. LLC – Video Tips

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