LLC vs. INC. – Which Is Right for Your Business?
Are you thinking about starting your own business, but you’re not sure what type of company to start? You have several options, and here we’ll focus on the LLC vs. INC. On one hand, an LLC gives you the ability to have complete control over your business and how it is run, all while protecting your personal assets. And on the other, incorporation allows you to preserve your individual assets and also offers the unique opportunity to grow your business to the point of “going public”.
This is just the tip of the iceberg in terms of differences; and a lot goes into making this decision for your business. We’re here to help and have compiled a list of distinctions to help you determine what’s right for you: LLC or INC.
What is an LLC?
LLC stands for Limited Liability Company. With an LLC, business owners are protected from being held personally liable for business actions.
An LLC is one of the more flexible choices for starting your small business and allows you to control several aspects of the process, such as the number of people who can own the company and how taxes are filed. Choosing an LLC is an excellent choice for first-time business owners because it protects you from losing personal property and assets in the unfortunate event of a financial or legal crisis within the business.
It also allows you to stay true to the type of work environment that works for you and your team. If monthly reports and weekly business meetings work best, you can make that a part of the work culture. However, if that’s not your style and you prefer a more laid-back type of business, you can choose to implement that culture. With an LLC, the possibilities are endless.
What is an Incorporation (INC)?
With an incorporated business, the company separates from the sole proprietor and becomes recognized by the state of incorporation. An incorporated business is an entirely separate legal business structure. Choosing to structure your business in this way will depend upon several factors, and it’s up to you as the business owner (perhaps with the help of an experienced CPA) to weigh pros and cons of this structure.
Industry, ownership structure, and tax consequences are just a few items to consider when structuring your business. How you’d like to run the business and if you plan to create a sellable company are others. Fortunately, you can start your business in the form of one entity, and down the road change the structure as it suits the growth and continuance of your operations.
Are you starting your business? Are you looking for advice? Taurus CPA Solutions provides growing companies with professional financial advice. Our goal is to help guide your business to new heights, reduce your overhead costs, and provide unique insights from a completely objective perspective. Give us a call at (410) 465-4600 or contact us online.