Get the Facts About an LLC
A Limited Liability Company (LLC) combines the tax flexibility of a partnership with the personal liability protection of a corporation. LLC owners report their share of business profit and loss on their personal tax returns, similar to tax reporting for a general partnership. Forming an LLC can help you separate yourself from your business, protecting your personal assets in the event of a judgment against the company. All 50 states and the District of Columbia now recognize this popular business type.
Start Protecting Your Assets Now
Form an LLC online quickly and easily, or call 800-818-6082 (toll-free) or 302-636-5440 to speak with a Business Specialist.
Why Thousands of Entrepreneurs and Business Owners Form LLCs
This business structure has many advantages, including:
- Owners have limited liability for business debts and obligations.
- Owners can report their share of profit and loss on their individual tax returns without filing a separate corporate tax return.
- Owners do not need to be U.S. citizens or permanent residents.
- LLCs do not need to hold annual meetings or record meeting minutes (though we recommend it).
- LLCs can be owned by individuals or other companies.
Comparing an LLC vs. a Corporation
Advantages of an LLC
- Has no limit to the number of owners
- Owners can report profit and loss on their individual tax returns
- Not required to hold annual meetings or record minutes
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Advantages of a Corporation
- May issue shares of stock to attract investors
- Corporate income splitting may help lower overall tax liability
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| Disadvantages of an LLC
- Cannot engage in corporate income splitting to lower tax liability
- Cannot issue stock
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Disadvantages of a Corporation
- Double taxation of corporate profits and shareholder dividends
- Must hold annual meetings and record minutes
- S Corporations have restrictions on number of owners
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Note: LLC owners can elect for the IRS to tax the LLC as a sole proprietorship, partnership, C Corporation, or S Corporation. Owners make this election through the IRS after the company forms with the state.
Not Ready to Form Your LLC Yet?
- Try our Business Startup Wizard to learn what others in your state and industry have done.
- Download our Free 10-Step Business Formation Guide.
- Get more details about forming a corporation or LLC in our Small Business Resources, or check out another service.
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