Starting a New Business: Corporation vs. LLC

Corporation vs LLC


The first thing that comes to mind when starting a new business is the type of entity to choose. Most often chosen are the corporation or the limited liability company (“LLC”). In order to make an informed decision, an entrepreneur should know the differences in these entities.

A “corporation” is a business entity owned by its shareholders and operated by its board of directors. A corporation is formed by filing Articles of Incorporation with the Secretary of State. The structure of a corporation consists of the shareholders and a board of directors who operate the corporation by the rules set out in the corporation’s bylaws, which are adopted and approved by the board of directors upon formation of the corporation.

A “limited liability company”, or LLC, is not a form of corporation, but a completely separate and unique type of hybrid entity combining a sole proprietorship with the liability protection of a corporation. Unlike a corporation, the LLC is taxed as a pass-through entity in which business profits are “passed through” to the owners, called members. An LLC is formed by filing Articles of Organization with the Secretary of State. The structure of an LLC is more flexible than that of a corporation. Members can also be managers, or a manager or group of managers can be elected by the members. The LLC is governed by an operating agreement.

Each of these entities provides limited liability protection for the owners. Persons making a business entity decision should consult with their attorney and with their accountant regarding their individual situation.

Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit or call 336-333-7907.

The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.