Corporations and Limited Liability Companies Compared
Not many years ago starting up a business provided little flexibility. For anything other than a sole entity or partnership, incorporation was generally the option. The advent of limited liability companies has changed this. However, with options comes the need for a decision, and one is well-advised to seek the counsel of a knowledgeable business lawyer in College Station before deciding upon whether to form the business as a corporation or LLC.
Management and Operations Differences/Similarities The owners of a limited liability company (referred to as members) have a degree of flexibility in setting up the management and operations structures absent those of corporations. A business lawyer in College Station can help set up a structure that best suits the needs of the LLC, but in essence, the members can either manage the entity, themselves, or assign this duty to hired managers. The LLC members do not need to record minutes of meetings or have regular shareholder meetings. A corporation, however, must be managed by the board of directors. Moreover, this entity must have in place bylaws, and hold shareholder and annual meetings the minutes of which must be carefully recorded.
Liability and Taxation A limited liability company can be set either with “flow-through” taxation or with taxation similar to that of a corporation. The disadvantage of the latter is that members are, in effect, doubly taxed—both the business and the members pay taxes. This is among the most common reasons prospective business owners opt for the LLC rather than corporate structure. However, it is a good idea to consult with a certified public accountant (CPA) before deciding on which type of tax structure is best for your needs.
Members of both LLCs and corporations share a fair degree of protection from personal liability. This “corporate veil” is not impenetrable, however. In cases of criminal fraud, for instance, state courts may hold the members liable.
Contact a Business Lawyer in College Station for Legal Assistance Before deciding whether an LLC or corporation is best suited as a structure for your business, consult with a business lawyer in College Station. Call Peterson Law Group at 979-703-7014 today.