Is an LLC a corporation?


Quick Answer

A limited liability company is not a corporation; in fact, there are distinct differences these business structures. An LLC doesn't have to pay income taxes on its profits, because these taxes are "passed through" to the owners of the LLC, who report them on their personal tax returns. A corporation is a nonpass-through entity that must pay such taxes.

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Full Answer

Unlike corporations, LLCs must pay taxes on employee benefits such as health and life insurance benefits and employer contributions to health savings accounts.

Corporations are formal structures that require a board of directors, annual report filing, shareholders' meetings and stringent regulatory compliance. LLCs are informal, merely requiring an informal operating agreement.

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