Getting started with a business structure, such as an LLC or Incorporation (Inc) can be a daunting task. Many people begin the process without understanding all the facts, regulations, and paperwork. Being in the wrong legal structure can cause tax problems, liability issues, or even the suspension of business operations. If you’re in the Chicagoland area and are considering making the switch from an LLC to an Inc, or vice versa, you need to understand the process and the benefits of each. By arming yourself with the right knowledge, you can avoid costly pitfalls and make the correct decision for your business.

What are LLCs and Incs?

An LLC—or Limited Liability Company—is a hybrid legal structure between a corporation and a sole proprietorship. It protects its members from personal liabilities, meaning that its members can’t be held responsible for any company debts or liabilities. An LLC does not pay taxes, meaning all profit—or revenue minus expenses—flows through the business, and is reported to the owner’s personal taxes.

An Inc—or Incorporation—is a legal structure that is separate from its owners. Its owners—or shareholders—can’t be held responsible for any company liabilities. An Inc has to pay taxes separately from its owners, so profits can’t flow through like an LLC. An Inc is also considered to be much more professional than an LLC.

Which is the Best Option?

This depends on many factors, such as the type of business you’re in, your situation, and your ultimate goals for the business. LLCs are typically better for small businesses that are equally owned. On the other hand, Incs are tend to be used by larger businesses.

When comparing LLCs to Incs it’s important to note the differences between the two structures. LLCs are usually simpler and require less paperwork. They also don’t have a board of directors, or as many restrictions as Incs. Incs, however, have more credibility than LLCs, since they carry a greater professional stature. Plus, Incs are easier to get financing for, since they carry more credibility with potential investors.

Incorporating in Chicago

No matter which type of business structure you decide to go with, it’s important to understand the rules and regulations involved. The rules and regulations of incorporations vary from state to state, and it’s even more important to understand the specifics of the Illinois Secretary of State for incorporation in Chicago.

In Chicago, there are specific requirements for incorporations which must be met in order to file. Depending on the type of business structure you choose, filing in Chicago can be done online or by mail with the Illinois Secretary of State.

If you’re unable to complete the paperwork on your own, you can always hire an experienced business lawyer to help you through the process. Experienced business attorneys understand the ins and outs of business law—especially when it comes to local regulations—and can help make sure that your business is compliant with any necessary requirements.

At the same time, online marketplaces such as UpCounsel provide access to highly experienced lawyers at an affordable rate. UpCounsel attorneys specialize in helping businesses set up their legal structure and can provide a crucial legal resource for businesses in all stages.

The essence

When deciding to form an LLC or an Incorporation in Chicago, it’s important to understand the process and potential legal pitfalls. While LLCs aren’t as credible as Incs and carry less paperwork, Incs can be more difficult to form and have more regulations. Hiring a business attorney is always an option to help avoid expensive legal fees. Companies such as UpCounsel provide access to experienced and highly rated attorneys at an affordable rate.


LLC vs Inc,


Business Structure