What are the differences between a corporation and an LLC?

A corporation and an LLC (Limited Liability Company) are both business entities created to provide liability protection for the owners of the business. However, there are some important differences between the two that should be considered when making a decision on which type of structure to use in New Hampshire. The first difference between a corporation and an LLC is the amount of paperwork that must be filed with the state to form the entity. Corporations must file organizational documents with the Secretary of State, and must adhere to formal organizational, operational, and reporting requirements. LLCs do not have as many formal requirements, and the necessary paperwork is much simpler to complete. The second difference is the taxation of each entity. Corporations are considered separate taxable entities, and the income generated by the corporation is taxed at the corporate level. LLCs, on the other hand, are pass-through entities, which means the profits and losses are passed through to the owner(s) and taxed at the individual level. The final difference is the amount of flexibility each entity provides. Corporations are bound by corporate bylaws and are subject to more formal governance and operational procedures. LLCs, however, are much more flexible and allow for more creative structures. In New Hampshire, both corporate and LLC structures can be used to protect the owners from personal liability. It is important to consider the differences between them to decide which type of entity works best for your business.

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What are the differences between a corporation and an LLC?

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