One of the questions that most business men concern themselves about is which is the better of the two: an LLC or a corporation? Although there may be a number of factors that could help you decide which is better for you as a business man, a limited liability company is usually the business structure one should really consider.

Although both structures vary they are alike where filing procedures are concerned. Both have to put their business on record with the secretary of state. But, whereas limited liability companies do not require you to declare whether or not your company will issue stock, what the stock value will be and such, corporations do require you to do so.

Both, an LLC or a corporation offer the individual business owner asset protection. However in certain states a limited liability company can provide persons with additional protection. Here, any judgment against a corporation can make the sale of the corporate stock corresponding to the amount of the debt compulsory. With a limited liability company the collectable debt is proportionate and restricted to profits earned by the company. This results in the money remaining in the company and not being distributed to the members. Besides, a judgment holder may not compel the company to be sold.
Yet another important advantage of a limited liability company is that the business owner can choose the way the unit is taxed. It could be as Sole Proprietor (LLC), S-corporation when any income taxes are not paid but the corporation’s income or losses are divided among and passed through to its shareholders who then report the income or loss on their own individual income tax returns. It could be as a C-corporation when the corporation’s shareholders or owners receive the benefit of limited liability for the obligations of the corporation, and are hence normally shielded from the corporation’s creditors even in the event that the corporation cannot pay its obligations. A real corporation or C Corp has several tax advantages, such as lower tax rates, fewer audits and better deductions,
You should discuss this with your tax advisor before making up your mind about the tax structure that is best for your company.

One of the greatest advantages of opting for a limited liability company is that there are fewer formalities. With a corporation, you will have to hold meetings with shareholders and the board of directors regularly which must be documented with resolutions or minutes or for both. Some states also demand an annual report to be filed with the secretary of state, failing which your corporation can be terminated and thus the asset protection that you set your corporation up to create will be eliminated. An LLC does not have to file this report. Thus, as a LLC you can save time as well as protect the company’s corporate structure.