Inc. vs LLC: What's the Difference?

Are you planning to start a company of your own? If that is the case, then you have to first register your company.

For registering your company, you have two different options: either to register as a corporation (Inc.) or a Limited Liability of a Corporation (LLC).

But, what is the difference between a Corporation and an LLC? Which is better between Inc. and LLC? Let’s find out.

Inc. vs LLC: What Is The Difference?

The basic difference between the two lies in their very names. As LLC suggests, it provides limited liability of the company to its owners. This means the owners of an LLC are not directly responsible or liable for the debts of the LLC. In short, the business matters are usually kept separate from the legal matters of an LLC.

A corporation, on the other hand, is of two different categories: C category and S category. But in general, while Incorporations also offer protection from liability, they have a different set of rules in terms of ownership and other management rules.

Apart from these differences, the most obvious ones are that LLCs can have as many owners whereas there can’t be many owners of an incorporated company. Another major difference between the two is the fact that LLCs can’t offer stocks to shareholders whereas Inc. can issue stocks in order to attract investors.

Then there is a difference in terms of tax liability between the two. A C category Inc. has to go through a double taxation process as they can’t split taxes to lower tax liability. However, in an LLC, the taxes to be paid can be split between the owners.

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Inc. vs LLC: Which Is Better?

Like we saw above, there are quite a few differences that exist between an Inc. and an LLC. However, what you choose for your company completely depends on the type of business you want to do. Generally, small or new business owners prefer to register as an LLC due to the lower risk margins. But, big companies like Apple and Microsoft register as Inc. because they can sell a lot of stocks and earn money.

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In the end, it boils down to your line of business. But, in general, an Inc. has better benefits over an LLC. If you found this article informative, let us know in the comments below.

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