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

A corporation and limited liability company (LLC) are both business structures in the state of Louisiana. There are several differences between the two structures. The most prominent difference is that a corporation is owned by its shareholders and is managed by a board of directors, while an LLC is owned by its members and managed by its members or hired managers. Corporations are established by registering with the state and issuing stock, while LLCs are established through the filing of Articles of Organization. Corporations are also subject to legal requirements not required of LLCs, such as holding an annual meeting for shareholders and keeping formal records. Another difference between a corporation and LLC is taxation. Corporations are generally taxed as two distinct entities: the company and the shareholders. The company pays taxes on its profits, and the shareholders pay taxes on their share of the profits referred to as dividends. LLCs, on the other hand, are generally treated as pass-through entities, meaning all of the profits and losses are “passed through” to the members, who report them on their individual tax returns. Finally, a corporation has perpetual existence, meaning it cannot be terminated without a formal dissolution process, while an LLC typically has an expiration date. This date can be changed depending upon the needs of the business or members of the LLC. In short, a corporation and LLC are different business structures with different requirements and implications. While both offer liability protection for owners, they differ in other ways such as taxation, ownership structure, and how they are established. It is important to understand the differences between the two before deciding on the right business structure for you.

Related FAQs

What are the implications of international securities transactions?
What are the elements of a valid franchise agreement?
What are the benefits of creating a business entity?
What are the issues related to online contracting?
What is the Sarbanes-Oxley Act and what are its implications?
What is an agency relationship in business transactions?
What is the distinction between common law and statutory law?
What is the concept of secured transactions in business transactions?
How do the principles of contract law apply to electronic contracts?
What are the limitations on the transfer of personal information in contract law?

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

Related FAQs

Related Blog Posts