What is the difference between a corporation and a limited liability company (LLC)?
In the state of Missouri, there are two primary business formations – a corporation and a limited liability company (LLC). A corporation is a legal entity that is separate from its owners and it is owned by shareholders. The shareholders are liable for the debts of the corporation, but not beyond the amount they have invested in the company. The shareholders elect a board of directors to manage the corporation and the board is responsible for the daily operations of the company. A limited liability company (LLC) is similar to a corporation, but with some key differences. Owners of an LLC are called members and members of an LLC have limited liability protection. This means that the members of an LLC are not liable for the debts of the LLC beyond the amount they have invested in the company. In addition, members of an LLC have more flexibility when it comes to management and making decisions. The members of an LLC can decide how the business will be managed and who will make decisions, rather than having to follow the rules of a board of directors like a corporation. The main difference between a corporation and an LLC is the level of protection for the owners and how the business is managed. Corporations provide shareholders with limited liability protection, but the shareholders must adhere to the rules set by the board of directors. An LLC provides members with limited liability protection and more flexibility when it comes to management and decision-making.
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