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Corporation vs. LLC

Perhaps the most common question we receive from individuals looking to start a new business is:

“What is the difference between a corporation and an LLC?” This is a very important question because understanding the differences between these two entities is essential to making the right choice for your new business. Or, in some cases, making a decision regarding whether to convert your existing company to a corporation or an LLC.

The first chart below addresses some of the important differences between Corporations and LLCs. The second chart below, which naturally flows from the first, lists some of the pros and cons of forming either entity.

These charts are not intended as a substitute for the advice of an attorney and a CPA. Many of the issues, especially the tax issues, are presented in a simplified form; therefore, in some situations the issue may be more complex with a different result than described below. You should speak with an attorney and a CPA about which entity is best for you based upon your needs and circumstances. Furthermore, these charts are based on the laws of the Commonwealth of Virginia. State law varies in the treatment of Corporations and LLC