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LLC vs. Inc: What's the Difference?

Edited by Huma Saeed || By Sumera Saeed || Updated on October 18, 2023
LLC stands for Limited Liability Company, offering personal liability protection to its members, while Inc. denotes a corporation with a distinct legal entity separate from its owners.

Key Differences

LLC, or Limited Liability Company, is a business structure that combines the pass-through taxation benefits of a partnership with the limited liability advantages of a corporation. Inc., on the other hand, stands for "Incorporated" and refers to corporations that have gone through the incorporation process.
Sumera Saeed
Oct 18, 2023
While both LLC and Inc. offer liability protection, their tax implications differ. An LLC's profits and losses pass through to its members and are reported on their individual tax returns, whereas an Inc. pays corporate taxes on its profits.
Sumera Saeed
Oct 18, 2023
Moreover, the ownership in an LLC is referred to as members, while in an Inc., they are called shareholders.
Sumera Saeed
Oct 18, 2023
The management structure is also distinct; LLCs can be member-managed or manager-managed, while an Inc. typically has a board of directors and officers.
Sumera Saeed
Oct 18, 2023

Comparison Chart

Definition

A business structure with pass-through taxation and limited liability.
A corporation that's a separate legal entity.
Sumera Saeed
Oct 18, 2023
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Ownership

Members
Shareholders
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Oct 18, 2023

Taxation

Pass-through taxation; members report on individual tax returns.
Pays corporate taxes on profits.
Sumera Saeed
Oct 18, 2023

Liability

Limited personal liability for members.
Limited personal liability for shareholders.
Sumera Saeed
Oct 18, 2023

Management Structure

Can be member-managed or manager-managed.
Typically has a board of directors and officers.
Sumera Saeed
Oct 18, 2023

LLC and Inc Definitions

LLC

A business structure where owners have limited personal liability for company debts.
After consulting their lawyer, they decided to form an LLC.
Huma Saeed
Oct 18, 2023
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Inc

A business entity that's legally separate from its owners.
TechWave Inc. just released its annual report.
Sara Rehman
Oct 18, 2023

LLC

An entity where profits and losses pass directly to its members.
The profits of GreenGardens LLC are split among its three members.
Sumera Saeed
Oct 18, 2023

Inc

An entity with a structured management, including a board of directors.
The annual general meeting for HealthFirst Inc. is scheduled for December.
Huma Saeed
Oct 18, 2023

LLC

A flexible management structure that doesn't require a board of directors.
The LLC chose to have a manager-led structure for operational efficiency.
Sara Rehman
Oct 18, 2023

Inc

A corporation that can issue stock to raise capital.
SwiftCars Inc. issued new shares to fund its expansion.
Janet White
Oct 18, 2023

LLC

A company type that can have an unlimited number of members.
DreamWorks LLC has members from various professional backgrounds.
Harlon Moss
Oct 18, 2023

Inc

A designation indicating a company has been incorporated.
After successful early growth, CraftyCrafters became CraftyCrafters Inc.
Sumera Saeed
Oct 18, 2023

LLC

A hybrid business entity combining characteristics of a corporation and partnership.
BrightTech LLC has grown rapidly in the past year.
Sumera Saeed
Oct 18, 2023

Inc

Alternative spelling of Inc
Sumera Saeed
Jul 13, 2016

Inc

Abbr of incoming
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Jul 13, 2016

Inc

(programming) increment
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Jul 13, 2016

Inc

(knitting) increase
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Jul 13, 2016

Inc

A Japanese measure of length equal to about two and one twelfth yards.
Sumera Saeed
Jul 13, 2016

Inc

A heterogeneous collection of groups united in their opposition to Saddam Hussein's government of Iraq; formed in 1992 it is comprised of Sunni and Shiite Arabs and Kurds who hope to build a new government
Sumera Saeed
Jul 13, 2016

Inc

A business that pays corporate taxes on its profits.
BrightFutures Inc. saw an increase in its corporate tax bill this year.
Harlon Moss
Oct 18, 2023

FAQs

Do both LLC and Inc. offer limited liability protection?

Yes, both structures provide limited liability protection to their owners.
Sumera Saeed
Oct 18, 2023

What does LLC stand for?

LLC stands for Limited Liability Company.
Sumera Saeed
Oct 18, 2023

How is taxation different between an LLC and an Inc.?

LLCs offer pass-through taxation to members, while Inc.s pay corporate taxes.
Sumera Saeed
Oct 18, 2023

Are members of an LLC the same as shareholders of an Inc.?

No, LLCs have members, while Inc.s have shareholders.
Janet White
Oct 18, 2023

Can foreign entities own an LLC or an Inc.?

Yes, in many U.S. states, foreign entities can own both LLCs and Inc.s.
Janet White
Oct 18, 2023

Are there ongoing formalities for an LLC like there are for an Inc.?

Inc.s typically have more formal requirements, like annual meetings. LLCs have fewer state-imposed formalities.
Janet White
Oct 18, 2023

Can an LLC issue stock like an Inc.?

No, only Inc.s can issue stock to shareholders.
Aimie Carlson
Oct 18, 2023

Can an individual form an LLC?

Yes, an LLC can have a single member or multiple members.
Janet White
Oct 18, 2023

Is there a limit to the number of members an LLC can have?

No, an LLC can have an unlimited number of members.
Sumera Saeed
Oct 18, 2023

What is the meaning of Inc.?

Inc. stands for Incorporated, referring to a corporation.
Huma Saeed
Oct 18, 2023

Which has a more flexible management structure, LLC or Inc.?

LLCs have a more flexible management structure compared to Inc.s.
Janet White
Oct 18, 2023

How are profits and losses handled in an LLC?

They pass directly to the members and are reported on individual tax returns.
Sumera Saeed
Oct 18, 2023

Does an Inc. require a board of directors?

Typically, yes, an Inc. has a board of directors overseeing its operations.
Janet White
Oct 18, 2023

How are decisions made in an LLC versus an Inc.?

LLCs decide based on member agreement, while Inc.s rely on their board of directors.
Sumera Saeed
Oct 18, 2023

Can both LLC and Inc. raise capital?

Yes, though Inc.s often have an advantage by issuing stock.
Sara Rehman
Oct 18, 2023

Can an LLC choose to be taxed as a corporation?

Yes, an LLC can elect to be taxed as a corporation by filing the appropriate paperwork with the IRS.
Janet White
Oct 18, 2023

Why might a business choose to become an Inc. over an LLC?

Businesses might opt for an Inc. structure for easier access to capital, stock issuance, or a more established corporate image.
Aimie Carlson
Oct 18, 2023

Is it easier to transfer ownership in an LLC or an Inc.?

In an Inc., it's often easier through the transfer of shares. LLC transfers depend on member agreements.
Sara Rehman
Oct 18, 2023

Which is more suitable for a small business, LLC or Inc.?

It depends on the business's needs, but many small businesses prefer the flexibility of an LLC.
Sara Rehman
Oct 18, 2023

Do all states recognize the LLC structure?

Yes, all 50 U.S. states recognize the LLC business structure.
Janet White
Oct 18, 2023
About Author
Written by
Sumera Saeed
Sumera is an experienced content writer and editor with a niche in comparative analysis. At Diffeence Wiki, she crafts clear and unbiased comparisons to guide readers in making informed decisions. With a dedication to thorough research and quality, Sumera's work stands out in the digital realm. Off the clock, she enjoys reading and exploring diverse cultures.
Edited by
Huma Saeed
Huma is a renowned researcher acclaimed for her innovative work in Difference Wiki. Her dedication has led to key breakthroughs, establishing her prominence in academia. Her contributions continually inspire and guide her field.

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