What are the differences between a corporation and a limited liability company (LLC)?
The main difference between a corporation and a limited liability company (LLC) in Florida is the amount of protection they provide to their owners. A corporation offers the most protection, as its owners (shareholders) do not have any personal liability for the company’s debts or liabilities. An LLC is different because, even though its owners (members) have limited liability for the company’s debts and liabilities, their personal assets can still be at risk in certain situations. Aside from the amount of protection offered, another major difference between a corporation and an LLC in Florida is the amount of paperwork involved in setting up and running the business. A corporation requires more paperwork, such as filing articles of incorporation with the Florida Department of State, creating bylaws, and issuing stock certificates. An LLC, on the other hand, requires far less paperwork, such as filing articles of organization and creating an operating agreement. Finally, the taxation of the two business entities is quite different. A corporation is taxed separately from its owners, meaning that the company pays taxes on its profits. An LLC, however, is taxed as a “pass-through” entity, meaning that the profits pass through the company and are taxed on the owners’ individual tax returns. As such, the owners of an LLC can be taxed at different tax rates.
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