Anyone who is starting a business will need to select a business entity or model with which they will follow. A corporation and limited liability company (LLC) are two different types of business entities that both offer their own benefits. Depending on how you would like ownership, taxation, and management to look for your business, you can select a business entity that reflects these professional goals. You may have an idea of how you want your business to run, but may not be sure which business entity this aligns with. Before deciding upon your business entity, speak with a reputable business attorney for advice on how to proceed with your business.
If you are beginning your business with a few investors or partners in mind, you should understand how corporations and LLCs differ in this regard. In corporations, the ownership of the business is divided by shares of stock purchased by owners, known as shareholders whereas LLCs’ owners are called “members.” These shareholders can determine how much ownership they would prefer to have by purchasing additional shares to own a larger percentage of the company or selling their shares if they wish to reduce their ownership amount. Corporations are a good option for those who are seeking outside investors.
LLCs do not look at ownership through the same financial lenses. LLCs can have as many owners as they want and their financial contribution does not have to determine their “level” of ownership. Instead, many...