What’s the difference between an LLC and Inc when starting a business?

[alenaghose]

I’m planning to register a business and came across LLC and Inc (corporation) as options. Can someone explain the key differences between the two in terms of ownership, taxes, and structure? Which one is better for a small business or startup in the U.S.? Appreciate any guidance.

 

[daisyfrank]

An LLC (Limited Liability Company) offers flexible management and pass-through taxation, while an Inc (Incorporation) is a corporation with stricter structure and potential for stock issuance. Both provide liability protection but differ in tax and ownership rules.

 

[niyati]

• LLC (Limited Liability Company): Flexible structure, protects personal assets, fewer formalities, pass-through taxation (profits taxed once via owners). Best for small–medium businesses.
• Inc (Corporation): More rigid, strict compliance, ability to raise capital via shares, double taxation (unless S-Corp). Best for larger growth-focused businesses.

 

[erwinsmith]

An LLC (Limited Liability Company) offers flexibility, pass-through taxation, and simpler management, making it ideal for small businesses. An Inc (Corporation) has stricter structure, can issue stock, attracts investors, and may face double taxation. The main difference lies in ownership, taxation, and governance requirements when starting a business.

 

[isabel]

LLP is flexible in management and the taxes available are pass-through, whereas Corporation (Inc) is stricter in nature, it may have to bear two taxes, and it is easier to raise capital. In the case of most of the small businesses, LLC is easier and tax-efficient.

 

[Jarwish]

An LLC offers flexible management, pass-through taxation, and limited liability, while an Inc (corporation) provides stock options, stricter regulations, potential double taxation, but stronger structure for raising capital and growth.

 

[Shane Warne]

The key difference between LLC and Inc (Corporation) lies in structure, liability, and taxation:

• LLC (Limited Liability Company): Flexible management, pass-through taxation, and protects personal assets. Ideal for small businesses seeking simplicity.
• Inc (Corporation): Formal structure with shareholders, board, and officers, corporate taxation, and easier to raise capital. Better for larger or investor-backed businesses.