Are you about to set up a new company? You would have to choose between setting up a corporation (Inc.) and building a Limited liability company (LLC). Both of these options offer personal liability protection, which means your personal assets are secured from allegations opposed to the corporation. This can be very important especially if your firm breaks down or end up getting sued, so that you won’t have to lose your personal properties.
But there are certain differences between them both and they are discussed here.
When you incorporate a business, an autonomous and distinct legal organization is formed that operates independently of its business head. An entity becomes incorporated when the owner files incorporation documents at the government agency where the company is formed. For example, for having a company registration you need to file the required paperwork with the head of the department here. The various benefits of a company registration are given below,
– Based on how much your business yields, you can maintain both your personal income and business profits at lower tax grading.
– Corporations can relatively access more funding and vendors as it is a widely accepted concept, unlike LLC.
– In contrast to Corporations, LLC cannot go public or be acquired by an investor.
– Corporate companies do not require paying for Social Security or Medicare taxes. But a LLC should have to.
– When you are a corporate owner, you can enjoy benefits like insurance and parking without being subjected to personal taxes.
Just like a Corporation, it is a separate legal entity with its own tax identification number and bank accounts. It offers the benefit of passing over taxes, legal protection and of course limited liability. Here are the advantages of LLC,
– Corporations need to file a good deal of paperwork regarding the articles of incorporation and the documentation and recording of shareholder meetings and voting on paramount decisions.
– LLC doesn’t require paying taxes for itself.
– When there is a loss, it can be deducted from your other income while incurring.
– It is more flexible as there are no restrictions on the number of leaders and their residence.
In a nutshell, Corporations are best for those who dream big and LLC is more suitable for those who are just looking for asset protection with minimum work involved.
The author is a successful entrepreneur. He has written various articles about nominee director, LLC and incorporation. He recommends Sandhurst Consultancy to have company registration in Singapore. To know more, visit http://e-sandhurst.com