A corporation is a separate legal entity that exists independently from its owners. A corporation is created and comes into existence when articles of incorporation (charter or certificate of incorporation in certain states) are filed with the prescribed fees, and accepted by the proper state authority.
Incorporate - Need To Know
- A corporation's life is not dependent upon its members. A corporation possesses the feature of unlimited life. If an owner dies or wishes to sell their interest the corporation will continue to exist and do business.
- Retirement funds and qualified retirement plans (like 401k) may be set up more easily with a corporation.
- Ownership of a corporation is easily transferable.
- Capital can be raised more easily through the sale of stock.
LLC - Need To Know
- Owners have limited liability from business debts and obligations.
- Owners can report their share of profit and loss on their individual tax returns without filing a separate corporate tax return.
- LLCs can be owned by individuals or other companies.
- LLCs do not have the same corporate formailities as a corporation.