The debate of LLC vs. Inc is a non-stop one in the business world. Whether you’re a start-up or a seasoned executive, deciding on a business structure is essential for growth. Companies may choose from a variety of forms, from a sole proprietorship to complex partnerships or corporations. Of the many options to consider, Limited Liability Company (LLC) and Incorporation (Inc) are two of the more popular choices for companies of all sizes in the United States.

The decision for LLC vs Inc, however, will be different for each company. If you’re a business owner, entrepreneur, or executive looking for business lawyers to help you navigate the legal landscape in Los Angeles, UpCounsel can provide you with legal assistance tailored to you needs. Our experienced UpCounsel attorneys will work with you to decide whether a LLC or Inc is right for you.

When considering between an LLC and Inc, there are a few key differences that you should be aware of. Both entities provide limited liability for the owners, which is an attractive feature when it comes to business formation. Additionally, both entities have the potential to save owners taxes in comparison to a sole proprietorship.


Forming an entity can be a confusing process. For LLCs, the process is relatively straightforward. A formal document is filed with the Secretary of State with the required filing fee, along with the Articles of Incorporation. LLCs also need to outline the rules for conducting business, which can either be a set of documents or the state’s standard operating agreement.

Forming an Incorporated (Inc) business is more complex. As with an LLC, formal documents are filed with the Secretary of State. Additionally, Incs need to file a Corporate Bylaws and Agreement of Ownership. Incs also need to adhere to certain corporate formalities. Failure to do so can result in the “piercing of the corporate veil” and the resulting of the owners’ limited liability protection.


LLCs are taxed similarly to sole proprietorships when it comes to federal tax purposes. That means that the owners file their individual taxes and pay taxes on all money that passes through the company. It’s also important to note that income earned by an LLC is subject to self-employment tax. On the other hand, Incs are required to file a corporate tax return and pay taxes on all profits generated by the company. Incs can also benefit from certain business deductions and credits.


The way an LLC or Inc is governed is another key difference. LLCs have two management options – members- or manager-managed. The members of a member-managed LLC have complete control over the business. If the LLC is manager-managed, the members appoint a third-party manager to handle the business operations. Incs follow a hierarchical structure as required by state regulations. That usually consists of shareholders, board of directors, and officers. In an Inc, the shareholders appoint the board of directors, who then in turn appoint the officers to manage the company on a day-to-day basis. It’s important to note that corporate laws vary by state, so the exact structure may vary from state-to-state.

At the end of the day, it’s up to you to decide whether LLC vs Inc is right for your business. Our experienced business lawyers at UpCounsel can provide you with legal guidance to make sure you make the right decision based on your particular needs. Whether you need ongoing legal assistance or one-time consultation, our network of experienced attorneys is ready to help you navigate the legal landscape in Los Angeles and beyond.


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