What is the difference between a corporation and a limited liability company?
A corporation and a limited liability company (LLC) are two distinct forms of businesses. While both provide their owners with limited liability protection, there are a few key differences between them. A corporation is a legal entity that is separate from its owners. It is owned by shareholders who are liable only for the amount they have invested in the corporation. The corporation is responsible for its debts and liabilities. It also has an extensive reporting requirement and pays corporate taxes. An LLC is a flexible form of business entity that gives its owners limited liability protection with fewer formalities and paperwork than a corporation. LLCs are owned by members, who can be individuals, corporations, or other LLCs. Unlike shareholders in a corporation, LLC members are typically only liable for the amount of money they have invested in the company. LLCs also have the benefit of pass-through taxation, meaning that all profits and losses pass directly to the owner’s personal taxes. Overall, a corporation and an LLC are two distinct forms of businesses with different features. A corporation provides limited liability protection with more paperwork and a corporate tax burden, while an LLC is a more flexible form of business entity with fewer formalities, less paperwork, and pass-through taxation.
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