What is the difference between a corporation and a limited liability company (LLC)?
A corporation and a limited liability company (LLC) are both business entities that can be formed in Washington. The main difference between the two is liability, the taxes the business pays, and the paperwork required. A corporation is a separate legal entity from its owners, meaning it is given many of the same rights and responsibilities of a person. As a result, the owners of a corporation have limited liability as they are not generally responsible for the company’s debts. Additionally, corporations are required to pay income taxes and must file additional paperwork with the government such as quarterly and annual reports. An LLC is similar to a corporation, but it provides more flexibility in the management structure and fewer paperwork requirements. An LLC is still a separate legal entity, meaning the owners of the company have limited liability. However, LLCs are not required to pay income taxes, and the profits and losses are passed on to the owners, who then report on their personal tax returns. Additionally, LLCs must file an initial registration form with the state, but they do not need to file any other documents, such as quarterly and annual reports. Overall, the main difference between a corporation and an LLC is that a corporation is legally separate from its owners with more paperwork requirements and taxes, while an LLC is legally separate from its owners with fewer paperwork requirements and does not pay income taxes.
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