form llcRegardless of the industry, when starting a new business, project, brand, or venture, the first step is to determine the proper legal structure. This typically becomes a choice between a corporation or a limited liability company.

The purpose of this post is to give you a broad strokes overview of a few legal structures so you can have an informed discussion with your attorney, accountant, or other professional advisor.

My goal is to explain the most important points for each in less than a three minute!

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Below I have 3 items for you that quickly give you a rundown on the most important points.

  1. A Infograph that shows the difference between LLC and Corporations.
  2. A video on why you should form an entity.
  3. A table breaking down the differences between LLC and Corporations.

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Infograph: Differences Between an LLC or a Corporation?

differences between llc and corporation

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Video on Why You Should Form an LLC or Corporation

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Table on Differences Between LLC and Corporation

LLC Explained – Corporation Explained

Different Forms of Business Entities

Entities Characteristics Limited Liability Company (LLC) Corporation
Ownership Rules Unlimited number of members allowed Unlimited number of shareholders; no limit on stock classes
Personal Liability of the Owners Generally no personal liability of the members Generally no personal liability of the shareholders
Tax Treatment The entity is not taxed (unless chosen to be taxed); profits and losses are passed through to the members Corporation taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends
Key Documents Needed for Formation Articles of Organization / Certificate of Formation; Operating Agreement Articles of Incorporation; Bylaws; Organizational Board Resolutions; Stock Certificates; Stock Ledger
Management of the Business The Operating Agreement sets forth how the business is to be managed; a Member (owner) or Manager can be designated to manage the business Board of Directors has overall management responsibility; Officers have day-to-day responsibility
Capital Contributions The members typically contribute money or services to the LLC and receive an interest in profits and losses Shareholders typically purchase stock in the corporation, either common or preferred
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