Is an LLC a Corporation?

Is an LLC a corporation? The short answer is no. A LLC is a limited liability company that can be taxed one of two ways.

One of the major differences is that with a LLC you can elect to be taxed as either a corporation or a partnership.

With a corporation, you can elect to be taxed as a corporation or you can elect to be treated as a Subchapter S corporation which passes through corporation income to the shareholders.

Please seek the counsel of an accountant before you make your decision.

Corporation vs. Limited Liability Company

Similarities

• Both offer similar Liability Protection for owners/investors.
• S-Corporations and LLCs are both eligible to "pass through" profits and losses to the owner's personal income tax return (at personal income tax rates), to avoid "double taxation".

Differences

Annual Reports:

• Delaware Corporations must name one officer and the board of directors on the Delaware Annual Report which is Public Record.
• Owners/Shareholders are not named.
• Delaware LLCs do not file Delaware Annual Reports.

Raising Capital:

• Delaware Corporations can raise capital through private sales to investors or may be listed to be publicly traded on a stock exchange (subject to securities regulations).
• Delaware LLCs can raise capital by selling shares to investors, but cannot be publicly traded on a stock exchange.

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