Should Your Business be an LLC or a Corporation?

by | Jul 17, 2018 | Firm News


You have finally decided it is time to start the small business you have been dreaming about. Your brand and goals are all laid out, and you can imagine everything from your business card design to the customers you hope to attract. Now, you must consider how to get started legally.

Depending on whether you are starting small and want to stay small, or want to grow into a larger organization, choosing the right business structure will pave the way for your success. While there are multiple options, such as choosing a sole proprietorship or a partnership, many people choose an LLC or a corporation for their ability to shield the members, managers, and officers from personal liability (provided there is no “piercing” of the corporate veil).

If you know you want that kind of protection, but don’t know where to go from there, here are some of the main benefits that distinguish an LLC and a corporation.

Limited Liability Company (LLC)

LLCs are one of the most popular options for start-up businesses. Starting an LLC isn’t necessarily any cheaper than starting a traditional corporation, but the process is often more streamlined. Some of the other benefits of choosing an LLC include:

  • You have some options for filing taxes, depending on how many members are in your company.
  • There is greater flexibility to change as the company grows.
  • You can have an unlimited number of members, and members don’t have to be U.S. citizens/residents (the same is not true for corporations).
  • There are fewer mandatory requirements and formalities than with corporations.


Some of the benefits of choosing a corporation include:

  • You can create investment opportunities for raising capital.
  • You will be able to hire more employees as the company develops.
  • You may be able to offer your employees health benefits.
  • Ownership is freely transferable (while an LLC often requires the approval of other members).
  • You may have better self-employment taxes than an LLC because the owner can be treated as an employee.

This outline is intended to help you get started thinking about the most appropriate form for your business to take, but it is not an exclusive list, and there may be other factors unique to your business that should be factored into the decision. Consider consulting with a business law attorney to help you make the best choice for your start-up business, as well as for your dreams for its future.