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It is more profitable to open an LLC than a corporation. However, they are both economic entities created by submitting constituent documents to the state (Rendtorff, 2019). In addition, they enable their owners to have the same type of protection and responsibility (Mancuso, 2021). As a rule, neither the owners of LLCs nor corporations are personally responsible for business obligations.
However, corporations have existed for a long time and offer a more predictable structure, viability, and effortless transfer of shares; LLC provides greater flexibility in management. A limited liability company is similar to a corporation, but it is easier to tax and has fewer requirements for maintaining documentation (Mancuso, 2021). In addition, LLC is the easiest-to-maintain organization with the least number of formal annual requirements. While in corporations, meetings are necessary to maintain corporate status.
However, it is difficult to say which company is better individually since both have disadvantages. For example, an LLC cannot attract external investments other than banks, while corporations can sell shares to raise capital (Mancuso, 2021). On the other hand, corporations may incur more fees than limited liability companies (Rendtorff, 2019). Therefore, it is essential to push away from the goals and opportunities of the business since an LLC is often better for a single owner and probably better for a partnership (Mancuso, 2021). LLC is more suitable for business owners whose main task is the flexibility of business management. Moreover, it would be best to create a corporation for a business owner who wants to have the maximum number of personal asset protection plans aimed at finding significant investments from outsiders. Thus, choosing the proper business structure will depend on the number of employees, the size and scope of the company, the level of participation of the owner, and tax considerations.
References
Mancuso, A. (2021). Your Own Limited Liability Company: Create an LLC in Any State. Nolo.
Rendtorff, J. D. (2019). The concept of business legitimacy: Corporate social responsibility, corporate citizenship, and corporate governance as essential elements of ethical business legitimacy. Responsibility and Governance Springer, Singapore, 45-60. Web.
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