LLC vs Corporation

U.S. Limited Liability Companies vs U.S. Corporations: Everything You Need to Know

It is important to consider whether forming an LLC or incorporating your new business is the most suitable option for you. While LLCs and corporations have some similarities, there are significant differences that can impact your taxes, protections, ownership, management, and other important aspects of your business. In the following information, we will compare the similarities and differences between LLCs and corporations.

A Limited Liability Company (LLC) and a corporation are two common business structures that offer different benefits and drawbacks.

An LLC is a business structure that combines the liability protection of a corporation with the tax benefits of a partnership. LLCs offer flexible management options, as the owners (also known as members) can choose to manage the company themselves or appoint managers. LLCs are also relatively easy to set up and maintain, as they have fewer formalities and paperwork requirements compared to corporations.

A corporation, on the other hand, is a separate legal entity from its owners (also known as shareholders). This means that the corporation, rather than the individual owners, is responsible for its debts and legal issues. Corporations offer limited liability protection to their shareholders, meaning that the personal assets of the shareholders are generally not at risk if the company faces financial or legal issues. Corporations also have the ability to issue stock and raise capital through the sale of stock. However, corporations have more formalities and paperwork requirements, and may be subject to more taxes than LLCs.

Ultimately, the choice between an LLC and a corporation will depend on the specific needs and goals of the business. It is a good idea to consult with a business attorney or tax professional to determine the best structure for your business.

LLC and Corporation Similarities

Here are some similarities between LLCs and corporations:

  • Formation: Both LLCs and corporations are required to file articles of incorporation or articles of organization with the state in which they are formed and obtain a federal Employer Identification Number (EIN).
  • Separate Legal Entities: Both LLCs and corporations are separate legal entities from their owners, which means they can enter into contracts, own assets, and incur liabilities in their own names. T
  • Limited Liability: Both LLCs and corporations offer liability protection to their owners, also known as “members” in the case of LLCs and “shareholders” in the case of corporations. This means that the personal assets of the owners are generally not at risk if the business incurs debt or is sued.
  • Registered agent requirements: Both LLCs and corporations are required to maintain a registered agent in each state where they do business. The registered agent is the person or entity assigned to receive legal notifications on behalf of the business.
  • Unlimited Number Of Owners: Both LLCs and corporations can have an unlimited number of owners (also known as “members” in the case of LLCs and “shareholders” in the case of corporations).
  • Corporate Formalities: Both LLCs and corporations are required to maintain corporate records and hold annual meetings.
  • State compliance: LLCs and corporations must maintain state compliance, typically by filing annual reports. These reports confirm or update basic business and contact information, and most come with a filing fee. While some states have different fees or requirements for LLCs and corporations (for instance, New Mexico and Arizona don’t require reports from LLCs), most states require regular reporting from both entity types.

Differences Between LLCs and Corporations

To decide between forming an LLC or incorporating, it’s important to understand the differences between LLCs and corporations.

Tax election options

LLCs have more tax election options than corporations. By default, corporations are taxed as C-corps, but they may be eligible to file paperwork with the Internal Revenue Service (IRS) to be taxed as an S-corp. Single-member LLCs are taxed as sole proprietorships and multi-member LLCs are taxed as partnerships by default, but LLCs may also elect to be taxed as C-corps or S-corps.

The following are the tax designations available to LLCs and corporations:

  • Partnership or sole proprietorship: These tax designations are subject to pass-through taxation, meaning that the business itself does not pay entity-level taxes. Instead, the income is passed through to the owners, who report it on their personal tax returns and are subject to self-employment taxes.
  • C-corp: A C-corporation files corporate income taxes, and shareholders must also report any income they receive on their personal tax returns. This results in “double taxation,” as the income is taxed at both the entity level and the personal level.
  • S-corp: S-corps, or “small business corporations,” are subject to various restrictions, including a limit of 100 shareholders and one class of stock. Shareholders must be US citizens or permanent residents and cannot be corporations, LLCs, or most other businesses. Shareholders may receive dividends, but shareholders who provide services must first be paid a reasonable salary, which is subject to self-employment taxes. S-corps are subject to pass-through taxation and do not file corporate income tax.

It is important to note that LLCs have the option to be taxed as any of the above designations, while corporations are limited to C-corp or S-corp taxation. For a summary of the effects of these tax elections, please refer to our Free LLC Guide.

Business ownership

LLC owners, also known as members, hold a percentage of the company known as “membership interest.” This interest is generally not easily transferable and may require the approval of other members before it can be transferred, if it is transferable at all. This is typically outlined in the operating agreement or state statutes.

On the other hand, the owners of a corporation, called shareholders, own shares of corporate stock, which are easily transferable. This can be more attractive to potential investors.

It is important to note that shares of corporate stock of a statuary closely corporation such as a “Wyoming Close Corporation” are not easily transferable and may require the approval of other shareholders before it can be transferred, if it is transferable at all.

Company management structure

In a corporation, shareholders elect a board of directors to govern the business and make strategic decisions. The board then elects corporate officers, such as the president, treasurer, and secretary, to manage the day-to-day operations of the corporation and carry out the decisions of the board.

LLCs offer a more flexible approach to management. In a member-managed LLC, the members themselves are responsible for running the day-to-day operations. In a manager-managed LLC, the members appoint or hire one or more managers to handle these responsibilities. In this case, the members function more like shareholders, able to vote out managers but not make business decisions.

Charging order protections

In many states, LLCs offer stronger charging order protections than corporations. If a shareholder of a corporation is personally sued, creditors in nearly all states can be awarded the shareholder’s ownership interest in the corporation, potentially allowing them to take control of the business. However, if an owner of a multi-member LLC is personally sued, creditors are typically limited to a charging order. This is a lien against distributions, meaning that creditors can collect any profits the owner would have received from the business, but they do not gain ownership interest or control of the LLC. It is important to note that the strength of these protections varies by state. For example, California and Minnesota offer fewer protections, while Wyoming extends protections to single-member LLCs as well.

Corporate formalities

Corporations are typically subject to stricter requirements for meetings and record-keeping compared to LLCs. For example, state statutes often require corporations to hold annual meetings and keep formal minutes, which must be recorded in a corporate book. While it is good practice for LLCs to follow these requirements as well, they are not typically required by state statutes.

It is important to note that a Wyoming Close Corporation or a Wyoming Close LLC may offer a lot of benefit to small business. One of the key features of Wyoming close corporations is that they are not required to follow the same corporate formalities as other corporations, such as holding annual meetings and keeping formal minutes. This can make them easier to manage and operate compared to traditional corporations.

It is also worth noting that there are other, less tangible differences between LLCs and corporations. The inclusion of “Inc.” or “Corp.” at the end of a business’s name can convey a sense of prestige and authority that “LLC” may not. Additionally, corporations have a longer history, which has resulted in a greater amount of legal precedent, making it easier to anticipate how legal changes and cases may play out in court.

Privacy & Anonymity

Starting a business can raise concerns about personal privacy for many owners. While both LLCs and corporations, require public state filings, they do offer the potential for privacy and anonymity. As separate legal entities from their owners, both LLCs and corporations do not publicly disclose the personal information of their members in certain states such as Wyoming. However, in most states, ownership information must be disclosed when an LLC or corporation is formed. To protect privacy to the extent possible, it is advisable to hire a reputable business formation or registered agent service that can assist with keeping certain information private. It is important to note that complete privacy is not guaranteed in most states.

If privacy and anonymity are of paramount importance to you, then a Wyoming Anonymous LLC may be a better option than a regular LLC or C-Corp. An Anonymous LLC in Wyoming allows for private ownership of assets, such as property or eCommerce site, and can protect your personal information by keeping your name and address off the internet. Similar to a regular LLC, an anonymous LLC does not require the disclosure of ownership information in the state of registration. Some people refer to these as “confidential LLCs” or “private LLCs,” and they are currently permitted in Delaware, Nevada, New Mexico, and Wyoming. Wyoming is a popular choice for those seeking privacy and anonymity with their LLC. The state’s strict privacy laws make Wyoming LLCs particularly advantageous.

If you want to form a corporation instead, it may also be beneficial to form a Wyoming Corporation or Wyoming Close Corporation. Wyoming’s Secretary of State has minimal reporting requirements, and there is no income tax for corporations or individuals in Wyoming. They only require that a company list a registered agent and an address to which legal documents can be delivered. The registered agent acts as the company’s face. For Wyoming corporations, annual reports request an officer, but nominees may be used; one of our local business attorneys can act as your nominee when filing the report to enhance your privacy. Using a reputable business formation service can help ensure that the personal information trail ends with the service provider rather than with the state, further protecting your privacy.

Please click the options below to find out more about Anonymity Planning and Wyoming Holding Company.

LLC vs C-Corp For Non-U.S. Person / Non-U.S. Resident / International Entrepreneur / Digital Nomad

You can own an LLC or a C-Corp in the U.S.A. as a non-U.S. citizen or a permanent U.S. resident without even setting a foot on U.S. soil.

It’s important to note that the choice between a limited liability company (LLC) and a C corporation (C-corp) will depend on your specific business needs and circumstances. Both LLCs and C-corps are legal entities that offer certain protections to their owners, but they differ in some key ways.

Here are some factors to consider when deciding between an LLC and a C-corp:

  1. Ownership and management: LLCs are typically owned by one or more individuals or entities and are relatively easy to set up and operate. C-corps, on the other hand, have a more formal structure and may be owned by multiple shareholders.
  2. Liability protection: Both LLCs and C-corps offer liability protection to their owners, meaning that the owners’ personal assets are generally not at risk if the business incurs debts or is sued. However, the level of protection may differ between the two types of entities.
  3. Taxation: LLCs are generally taxed as pass-through entities, meaning that the business itself is not taxed on its profits. Instead, the profits and losses of the LLC are passed through to the owners, who report them on their personal tax returns. C-corps, on the other hand, are taxed as separate entities, and the profits of the corporation are taxed at the corporate level.
  4. Potential for growth: C-corps have the ability to issue stock, which can make it easier to raise capital and potentially attract investors. LLCs do not have this capability, though they may be able to raise capital through other means.
  5. Establishing Business Credit: Many international individuals choose C-Corporations over LLCs due to the ability to establish credit lines under the company’s name, as opposed to the LLC structure where credit must be established through its members, which can pose challenges for non-U.S. residents.

Wyoming is a popular state for non-residents and those living overseas. This is due to the simplicity of forming and maintaining an LLC or C-Corp in Wyoming. There are no state taxes or tax returns to file. You only have to file a federal return, which is the same for all LLCs and C-Corp. Everything can be handled online. There is no need to visit neither Wyoming or the U.S.A.

We think it may be more beneficial to form a Wyoming C-Corp instead of an LLC for an over-seas owner. Please click here to read why forming a Wyoming C-Corp instead of an LLC may be more beneficial for most International Owner(s) in 2023.

It’s important to note that even though Wyoming does not have a state income tax, you may still be required to pay federal income taxes to the IRS if your income is sourced in the United States. On the other hand, income sourced outside the United States is generally not subject to taxation.

Non-U.S. Foreign Company Becoming A Shareholder Of A U.S. LLC or C-Corp

If you own a foreign, non-U.S. company in your home country, it is possible for your company to become a member of a U.S. Limited Liability Company (LLC) or a shareholder of a C-Corporation instead of you personally. There are no specific restrictions on the type of foreign, non-U.S. company that can join a U.S. LLC or a C-Corp. However, the foreign company may need to meet certain legal and regulatory requirements to do business in the United States and become a member of a C-Corp or LLC. This may include obtaining a tax identification number from the Internal Revenue Service (IRS) and registering with the appropriate state agency, as well as complying with U.S. immigration laws if the company plans to send employees to work in the U.S.

  1. Incorporating in the U.S.: You can incorporate your business as a corporation or limited liability company (LLC) in any state in the U.S. This requires you to follow the incorporation process in that state, which typically includes filing articles of incorporation or organization, choosing directors or members, and obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
  2. Setting up a branch office: If your business is already incorporated in another country, you can set up a branch office in the U.S. This typically requires you to register with the state in which you will be doing business and obtain an EIN from the IRS.
  3. Partnering with a U.S. business: You can also consider partnering with a U.S. business to enter the U.S. market. This could involve forming a joint venture or entering into a strategic alliance with a U.S. company.

If you are looking to form a Holding Company in the U.S. then a Wyoming LLC or C-Corp may be your best option. Please click here to find out more.

In addition to these options, it’s important to consider the various legal and tax implications of doing business in the U.S. as a non-U.S. person. You may need to obtain visas or work permits in order to work in the U.S., and you may be subject to different tax rules depending on your business structure and the type of income you earn. It’s a good idea to consult with a lawyer or tax professional to ensure that you are in compliance with all relevant laws and regulations.

LLC or Corporation?

When deciding between an LLC and a corporation, it is important to consider the goals and needs of your business. LLCs are often preferred by small businesses that value flexibility, while corporations may be a better fit for larger businesses that require more structure or are seeking to attract multiple investors. Regardless of which type of entity you choose, Triple B Business can provide assistance with formation, registered agent service, and other business needs.

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When choosing a name for a business in the United States, it is important to consider a few key factors including availability, distinctiveness, legality and branding.

If you are setting up a Limited Liability Company (LLC) or a Corporation, you will also need to include a designator (suffix) in your business name, such as “LLC” or “INC.” This will help to differentiate your business from other types of legal entities.

Please click here to find out more.

It is not easy to determine which type of business entity, an LLC or corporation, is best for you as it depends on multiple factors such as your business goals, the nature of your business, and your individual circumstances.

If you are a U.S. person / U.S. resident please click here to find out more.

If you are a non-U.S. person / non-U.S. resident please click here to find out more.

Wyoming is a leading incorporation domicile due to low fees, no taxes, simple filing and maintenance requirements along with allowing anonymous LLCs and corporations.

For more information please click here.

If you are a U.S. resident not living in Delaware or Wyoming, the best state to form your business depends on various factors. Typically, it’s advantageous for a U.S. citizen or permanent resident to form the business entity in their home state. However, for most businesses forming a company in Wyoming is also a great choice.

If privacy and anonymity are important to you, forming a Holding Company in a state like Wyoming may be a better choice. Holding Companies can choose their domicile as they are only considered as transacting business if they engage in activities beyond holding assets and leasing them.

For further information, click here.

Common choices for a holding company (a.k.a parent company) are Wyoming, Nevada, Delaware and New Mexico. Wyoming is currently the leading state to form a Holding Company (LLC or Corporation) due to the specific statutes, anonymity, asset protection and comparatively low fees.

Please click here to find out more.

In order to incorporate in Wyoming, you need to have a company name, business address, registered agent, share count, par value, and incorporator. These are the only requirements by law to establish a corporation.

For more information please click here.

Yes, as a non-U.S. person / Non-U.S. resident / International Entrepreneur / International Founder / Digital Nomad you can form an LLC or C-Corp in the United States. In fact, it is not even necessary to physically visit the U.S.A, as it is possible to set up your LLC or C-Corp online.

Please click here to find out more.

You don’t need an SSN (Social Security Number) or ITIN (Individual Taxpayer Identification Number) to get an Employer Identification Number (EIN) from the IRS. An Employer Identification Number (EIN), also known as a Federal Tax Identification Number or a Federal Business Tax ID, is used to identify a business entity not an individual. You only need an SSN (or ITIN) if you want to apply for an EIN online with the IRS.

We have business formation packages for Non-U.S. owner(s) that includes EIN application for a discounted fee of $150. You can also hire us to obtain your EIN from the IRS for a fee of $175.

An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service (IRS) for individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain, a Social Security Number (SSN) from the Social Security Administration (SSA). ITINs are issued to foreign nationals and others who have federal tax reporting or filing requirements and do not qualify for SSNs.

The first step is to get an EIN from the IRS. You cannot open up a U.S. bank account without an EIN for your LLC or Corporation.

The easiest option is to opening up a business bank account online with a Fintech company like Mercury, Novel etc.

Another solution is to visit the United States yourself.

For other options and more information to open up a U.S. business bank account please click here.

Wyoming is a leading incorporation provider with low fees and no corporate income taxes. Delaware is generally only used by those raising venture capital or looking to go public.

For more information please click here.

How Triple B Business can help in starting your new company?

The fastest, easiest way to start your new company? Hire us and get everything you need: registered agent service, privacy, free mail forwarding, and the guidance of local experts.

We currently offer Business Formation Services only in the States of Wyoming and Delaware because these two great states offer multitude of advantages to new small business owners.

Here’s how you can start the process with Triple B Business today in 3 easy steps:


Tell Us Your Business Name

If you have already decided your new business name then simply enter it on our form. We will perform a free name search for you with the state.


Answer A Few Questions.

Answer a few questions and enter the required information on our business formation form. If we have any questions then we will get back to you.


We Will File Your Paperwork

We will complete your paperwork and be off to the races filing your new company with the state.

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