When looking to form a business in Los Angeles, many entrepreneurs are faced with the decision of whether to form a Limited Liability Company or a Corporation. Both are viable options for businesses, but it is important to understand the differences between them so you can make an informed decision. Getting help from a lawyer in Los Angeles will give you a better idea of the best option that fits your business’s needs.

What is a Limited Liability Company (LLC)?

A Limited Liability Company (LLC) is a business structure that is formed by filing paperwork with the Secretary of State. An LLC is a combination of a partnership and corporation, as it offers the legal protection of a corporation—with the ability to pass through income and losses of the LLC to its members—but allows the flexibility of a partnership in terms of management.

The biggest advantage of an LLC is that it can help limit the financial liability of its owner(s). This means that while the owner(s) typically will not be liable for the LLC’s debts and liabilities, their own personal assets will not be tied to the LLC’s financial obligations. This is in contrast to a sole proprietorship or a partnership where the owner may be held personally liable for all business debts and liabilities. Additionally, LLCs allow for pass-through tax treatment, which is beneficial for those who want to avoid the double taxation associated with C Corporations.

What is a Corporation?

A Corporation is a separate legal entity that is formed by filing paperwork with the Secretary of State. Corporations can have multiple owners, which is in contrast to a sole proprietorship or partnership. Corporations also have the most flexibility when it comes to raising capital, and they are allowed to make their own investments and enter into contracts.

The biggest advantage of a Corporation is that it offers the most liability protection for its owner(s). Corporations have the power to issue stock, which can help attract investors and employees by offering equity in the business. Additionally, Corporations have the option of choosing to be taxed as either a C Corporation or an S Corporation. C Corporations are taxed twice, once on the corporate level and once when the profits are distributed to its shareholders, while S Corporations are not taxed at the corporate level and instead their income is passed through to their shareholders.

How a Lawyer in Los Angeles Can Help You

Ultimately, choosing between LLCs and Corporations is a decision that should be based on the individual needs of your business. Consulting with a lawyer in Los Angeles can help you understand the legal and financial matters associated with each business structure, as well as the tax implications of your decision.

UpCounsel’s experienced lawyers are available to advise on the best business structure for your business. UpCounsel’s attorney network features reliable attorneys who specialize in business law and have an average of 14 years of experience. This means you get the best legal advice and help when forming a business in Los Angeles. Additionally, UpCounsel’s website makes it easy to access experienced attorneys from anywhere in the United States, as well as find the best lawyer for your particular situation.


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