Business

Difference between LLC and Inc




  • Main Difference

    LLC and Inc are the types of business entities related to business structure in case for starting a company. LLC stands for Limited Liability Company which is a business structure providing limited liability to its owners. Inc. Is short for Incorporated offering liability protection interns of ownership structure, rules, management and tax profits  different from LLC. Both of the LLC and Inc. have limited liability. Inc. Is better for large business entities while on the other hand LLC is suitable for smaller business with few shareholders. Taxation is double in Inc. While in LLC there is single taxation by passing the profit or loss to members. LLC has an advantage over the Inc. that LLC does not the make limit upon the number of owners while Inc. make restrictions upon the number of owners. Inc. or corporation may issue the shares of stock for investors to attract while on the other hand LLC goes in disadvantage as the stock can’t be issued. Too much paperwork is required for starting the business in Inc. while on the other hand in LLC there is not much paperwork.

    LLC

    llcLLC has an advantage that in LLC profit and loss are passed through to the owner’s individual tax return. Very small paperwork is required to start a business in LLC. LLC does not the make limit upon the number of owners. Chocie of taxation structure is given in the LLC. Management level consists of members and managing members. LLC is preferred for small business with few shareholders. All the activities of the members should be recorded but no need of periodic meetings.

    Inc

    incorporatedInc. stands for Corporation. Too much paperwork is required to start a business in Inc. Inc. make restrictions upon the number of owners. Choice of taxation structure is not given in the Inc. Management level is composed of shareholders, directors and officers. Inc. is preferred for large business entities. There is periodic schedule for the meeting of the shareholders. Investors are attracted by issuing the shares of the stock. Income splitting is allowed which is much helpful for lower overall tax liability.

    Key Differences

    • LLC stands for Limited Liability Company while on the other hand Inc. Is short for Incorporated
    • Is better for large business entities while on the other hand LLC is suitable for smaller business with few shareholders.
    • In Inc. Management level compromise of shareholders, directors and officers while in LLC only members and managing membrs of the company are at management level.
    • In Inc. Shareholders are the owners while in LLC members are not the owners.
    • Taxation is double in Inc. While in LLC there is single taxation by passing the profit or loss to members.
    • LLC gives the choice of taxation structure while Inc. Does not give the choice of taxation structure.
    • In Inc. Meeting of shareholders is required periodically while in LLC there is no need of periodic meetings but activities should be recorded.
    • LLC has an advantage over the Inc. that in LLC profit and loss are passed through to the owner’s individual tax return.
    • or corporation may issue the shares of stock for investors to attract while on the other hand LLC goes in disadvantage as the stock can’t be issued.
    • or corporation allow income splitting which may be quite helpful for lower overall tax liability while on the other hand LLC has a disadvantage that it don’t allow income splitting to lower tax liability.
    • LLC has an advantage over the Inc. that LLC does not the make limit upon the number of owners while Inc. make restrictions upon the number of owners.
    • Too much paperwork is required for starting the business in Inc. while on the other hand in LLC there is not much paperwork.

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