Every founder of a startup must form a legal business entity and, to do so, the founder must choose the legal form the business entity will take. From among the different types of entities that a founder can choose, the corporation and the limited liability company are the most popular.
Each entity has its benefits and pitfalls. For example, limited liability companies (LLCs) may choose flow-through tax treatment, which results in lower overall taxes to shareholders; however, due to their more flexible tax treatment, corporate governance standards and fiduciary duties, LLCs are typically associated with higher administrative and legal costs. This article provides a high level comparison of the corporation and the LLC.
