What are the differences between a corporation and a limited liability company (LLC)?

In California, there are a few key differences between a corporation and a Limited Liability Company (LLC). Both types of businesses are considered legal entities, however, they have distinct differences in the way they are structured, their ownership and their taxes. A corporation is a business entity that is separate from its owners and shareholders. It is owned by shareholders and operated by officers and directors. This type of business is highly regulated and must adhere to government requirements and laws. Corporations must pay corporate income taxes and can offer their owners limited liability, which means the shareholders are not personally liable for the losses and debts of the company. A Limited Liability Company (LLC) is a form of business entity that is separate from its owners. Unlike a corporation, an LLC has “pass-through” taxation. This means the company does not pay income taxes separately from its owner, but instead the income and losses flow directly to the owners. Additionally, an LLC has the advantage of providing the owners with protection from personal liability for the debts of the business. Both types of businesses are popular in California and have their own advantages and disadvantages. Corporations offer shareholders limited liability, but may have more regulations and paperwork to follow. LLCs have “pass-through” taxation, but owners may be personally liable for debts and losses. Whichever type of business structure you choose, it’s important to research the differences and make the best decision for your business.

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What are the differences between a corporation and a limited liability company (LLC)?

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