What is the difference between a corporation and an LLC?
The main difference between a corporation and an LLC in Missouri is the way taxes are handled and the kind of protection they provide for their owners. A corporation is a formal business structure with its own legal identity separate from its owners. Corporations in Missouri can be taxed as a C-corporation or an S-corporation. In a C-corporation, profits are taxed at the corporate level. This means the corporation pays taxes on its profits before any of the profits are distributed to the owners. In an S-corporation, the profits passed to the owners are taxed as personal income and the corporation itself is not subject to taxation. Corporations also provide liability protection for its owners, so that any debts or other legal matters the corporation is involved in will not affect its owners. An LLC is a flexible and informal type of business entity. It is not taxed as a separate entity like a corporation so all of the profits are passed on to the owners and are taxed as personal income. However, the owners of the LLC only have to pay taxes on the profits from the LLC that they have actually received, unlike with a corporation where the profits are taxed whether they are distributed or not. An LLC also provides liability protection for its owners, so that any debts or other legal matters the LLC is involved in will not affect them personally. Overall, the main difference between a corporation and an LLC in Missouri is the way taxes are handled and the kind of protection they provide for their owners.
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