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

In Washington, there are two main types of business entities that are legally recognized: corporations and limited liability companies (LLCs). The main difference between a corporation and an LLC is how they are taxed and the amount of personal liability they offer. A corporation is a legal entity that is separate and distinct from its owners and operates according to its own set of regulations. In Washington, a corporation is taxed as its own entity, meaning the profits made by the business are taxed separately from the profits of the owners. This can be beneficial in some cases as owners can minimize the amount of taxes they have to pay. However, corporations do not provide the same amount of personal liability protection as an LLC. In the event of a lawsuit, a corporation’s owners can still be held liable for the company’s debts and legal judgments if the company is unable to cover them. A limited liability company (LLC) is similar to a corporation in that it provides owners with limited liability protection in the event of a lawsuit. That is, their personal assets are typically protected from the business’s debts and judgments. Unlike corporations, LLCs also don’t face the same tax structures. Instead, the LLCs profits and losses will be “passed through” to the owners and taxed on their individual tax returns. This can provide owners with more flexibility in how they structure their taxes. Overall, the main differences between a corporation and a limited liability company are how they are taxed and the amount of personal liability they offer. It is important to understand these differences before choosing which type of business entity to form.

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

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