Should You Incorporate or Form an LLC?

Typically, most people incorporate or form a Limited Liability Company (LLC) to safeguard their home, car, and personal savings. Incorporating helps you conduct business free from worry that you might lose personal possessions because of a business liability. Both a corporation and an LLC allow owners to separate and protect their personal assets from business debts and obligations. However, these two legal business structures have a number of differences.

LLCs are popular with small business owners because they combine the simplicity of a corporation with the tax advantages and flexibility of a partnership. Owners compute their share of business taxes on their personal tax returns. Both businesses and individuals can own an LLC. LLCs draft an internal operating agreement to govern the ownership.

Unlike LLCs, corporations issue shares of stock. The IRS taxes most corporations at a lower tax rate than individuals. Corporations use bylaws to set forth the management rules with their shareholders, directors, and officers.

Still can't choose the right structure for your businss? Use our Business Startup Wizard to learn what other business owners in your state and industry have done.

We make the process of forming your new corporation or LLC fast and easy. Form your new business online or call a Business Specialist at 800-818-6082 (toll-free) or 302-636-5440.