How Is an LLC Different than an Incorporation?

An LLC is like a corporation, in that it also affords limited liability protection. However, it’s different from a corporation in two fundamental respects.

Number one, it’s taxed like a partnership, so that the income, the gains, and the losses flow through to the members of the LLC.

Secondly, there are typically fewer corporate formalities, so an LLC is a little bit easier to run.

The caveat is that if you’re planning to have a large company over time, you probably want to have a corporation instead of an LLC, because there’s a better body of law, which will help you manage the corporation.