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LLC vs Corporation: A state comparison

by Staff Writer
06 Oct 2021 at 10:00hrs | Views
Recent statistics show that the total of active Limited Liability Companies in the state of Florida totaled to around 1,971,003. LLCs and corporations may be similar when compared; however, the two may indicate that they differ significantly in context after research. Furthermore, businesses may investigate their types of characteristics in order to choose carefully which alternative may be more suitable for their type of trade.

Why LLCs are popular
Limited liability companies are labeled LLCs. LLCs indicate a simple US business structure which business owners may use in order to protect their assets by offering personal liability protection and pass-through taxation.

LLCs appear to provide small businesses, startup owners, and even sole proprietors with tax advantages, a sense of establishment, and limited liability, which means that each owner is not personally liable for any company-related lawsuits or debts. LLCs are potentially preferred by entities that may possibly require a good sense of flexibility, simplicity and credibility.  

Limited Liability Companies (LLCs) seem to be a fundamental entity of the economic sector and appear to form a critical part of the small business and startup communities. Aside from the credibility that potentially pairs with starting your own LLC and the options to save on taxes, LLCs offer essential but very necessary benefits to these smaller businesses that include protection of personal assets (car, house, savings, etc.) if anything should happen to the company.

Why corporations may be preferred
A corporation may be described as a legal entity that is considered to be separate from its owners. A company labeled as the term corporation indicates that it can enter into contracts, own assets, and borrow money. Being a corporation may also insinuate the potentiality of being sued while also having the legal grounds to sue. Small businesses may usually consider corporations to form the possibility of attracting investors and the possibility of limited liability protection.

Corporations may be preferred over the opportunity of an LLC since they appear to offer the likelihood of an investor-friendly tax option as well as protection of personal assets. Small businesses or startups could also consider the notion of a corporation to be the right choice should they potentially rely on investors instead of private capital since investors could conceivably offer corporation tax policies.

Starting your own LLC
Starting an LLC may be easier than you would realize. As a potential business owner, you have the opportunity to choose to complete it in a few simple steps or opt for an online LLC service to do the work for you. Depending on which state you may select, your registration process may differ; however, it is essential to consider that all states besides Maine offer the possibility of online filing.

Once you have decided on a potential name for your LLC, you would have to consider choosing a registered agent, which plausibly is required in most states. According to most states, registered agents would have to be considered 18 years or older; they should have a physical address in the relevant state and conduct themselves in regular business hours.

In order to consider the formation of an LLC, you would have to prepare formation documents titled "Articles of Organization" or, in some states, labeled as "Certificates of Formation" or "Certificates of Organization." Most states appear to have online filing operations; however, each state requires a fee to process the application itself.

Once the respective state has potentially approved the documentation, it could be a crucial step to create an LLC operating agreement for all company members to determine their possible roles, management, and ownership structure. An operating agreement has been described as a placeholder should any potential disputes arise. The final official step for completing your LLC setup would be to register your employer identification number (EIN) online through the IRS. The EIN, similarly to a social security number (SSN), would allow for the IRS to track the business and keep track of tax reporting.

Starting a Corporation
Like LLCs, corporations require business names that are unique and distinguishable and a registered agent, same as an LLC. However, corporations differ from LLC s since they need initial directors before any formation documentation. In most states, initial directors are necessary since it will be their responsibility to oversee the corporation until the first meeting.

File formation documentation would be necessary to be required with your state. Formation documents for corporations differ from LLCs since they have some different requirements that include a relevant corporate name and principal address, corporate service of process agent name, and street address; and they may expect the number of authorized shares the corporation is allowed to issue.

Similar to LLCs, corporations require an EIN to identify the business entity. The EIN for corporations is needed for federal and tax purposes, to have the possibility of opening a bank account, and to hire employees.

Comparing Florida LLCs and Corporations

You have the option of setting up an LLC in Florida for the cost of $125 independently and online simply by filing the Florida Articles of Organization with the Division Corporation. The essential traits of an LLC business entity should meet Florida State guidelines; it should be distinguishable from any other entity or DBA registered in Florida. After naming your LLC and selecting your registered agent, you may be required to complete your Florida LLC by filing your Articles of Organization with the Division of Corporations. This document could be submitted online or mailed to the Tallahassee Division of Corporations and processed within 2 to 4 weeks.

To set up a corporation, you would probably need to read the Florida state statute 607.0401 about corporation naming guidelines for more information. Similarly to LLCs, you would need a registered agent. For more information regarding hiring an registered agent, one can visit the The Really Useful Information Company (TRUiC) website. After that, choose your corporation director who both are necessary to file the Articles on Incorporation with the Florida Department of State. Florida includes a filing fee of $35.00 along with an additional $35.00 for the designation of a registered agent.

In Florida, you have the opportunity to consider an online submission, mailing to the Tallahassee Division of Corporations, or you could possibly do in-person delivery to the Tallahassee Department of State.  

Comparing California LLCs and Corporations
LLC startups in California come at a low cost of $70.00 when compared to the Florida cost. Post naming your corporation, you may file online with the Secretary of State or fill out a hard copy of California Form LLC1 and mail it in or deliver it in person. The filing fee is $70. Unlike Florida, California does not have the advantage of submitting your documents online, leaving you the option to mail it to the Sacramento Business Entities Filings or in-person submission to the Sacramento Secretary of State. Whichever opportunity you may consider should take the processing time of 5 days.

You'll need to file an Initial Statement of Information (Form LLC-12) either online, in-person, or through the mail with the California Secretary of State within 90 days of forming your LLC for $20.00.

Forming a successful corporation in California is a simple process that may be achieved by filing the Articles of Incorporation with the Secretary of State. After following the necessary steps of naming the corporation according to the  California state statute, you would have to consider a registered agent to have the possibility of succession.

After you have likely chosen a registered agent and at least one director,  your corporation may be official after filing the California Articles of Incorporation form with the Secretary of State for $100.00. California offers the options of online, mail, and in-person delivery to Sacramento Business Entities Filings Unit.

Final Take
After comparing LLCs and corporations in two of the Americas most notorious states, it could be considered that both states are very suitable for beginning ventures and each come with their pros and cons. California, when compared to Florida, seems to be the more affordable option for LLCs. Based on evidence, corporations in both states are pricey however, Florida would be the cheapest option when compared to California.

Source - Byo24News