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Don’t be intimidated by the idea of forming a legal entity like an LLC. All you need is an understanding of what your business will do, how you plan to run it, and your state’s LLC filing fees.
Both LLCs and corporations protect owners’ personal assets from business liabilities or debts. The main difference between the two are:
How they’re owned: LLCs have one or more members while corporations have shareholders.
How they’re maintained: LLCs have less formal record-keeping and reporting requirements.
How they’re taxed: LLC profits pass through to members before taxes, while profits for some corporations are taxed at the company level first.
An LLC is a type of business entity while an S corporation is a federal tax election. Either an LLC or a C corporation that meets certain requirements can elect to be treated as an S corporation for tax purposes.
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