Naperville Business Formation Lawyers

If you’ve got a great business idea, it’s only as good as you can form a company around it. Most small business owners these days are choosing to form limited liability companies (LLCs) or corporations to realize their visions. If you’re one of them, we can provide the experienced legal guidance you need to ensure the legal framework of your business is secure.

Roscich & Martel Law Firm, LLC can ensure the proper formation of your new business if you wish to establish an LLC or corporation. Both of these business structures come with unique attributes, but rest assured that we can explain all of your options so that you can make the best decision for your company. When you work with our business formation attorneys in Naperville, know that you’re working with dedicated professionals who can provide the individualized level of attention you need to move forward.

Schedule a consultation to learn more. Call (630) 793-6337 now to get started! 

LLCs & Corporations: How Are They Different?

Ultimately, the factors that differentiate these two business models from each other are liability, taxation, and maintenance. Take some time to review the information below and contact our business formation lawyers in Naperville if you have any questions!

Liability under LLCs & Corporations

A business owner’s personal liability for a company’s debts matters a great deal. The more liability protection there is, the less able business creditors are to pursue damages from owners personally.

LLCs offer limited liability protection for their owners, often referred to as “members.” Usually, an LLC’s business creditors will be limited to attacking assets owned by the LLC itself, not its individual members. This means that homes, personal savings accounts, retirement accounts, and other personal assets owned by an LLC member should be safe if a business creditor collects on debt. A possible exception to this can include times when a member has personally guaranteed a business debt.

Corporations usually offer the greatest degree of personal liability protection for owners/shareholders. If a creditor is owed a significant sum of money by the corporation, shareholders stand only to lose their investments – not their personal assets. As with an LLC, though, any owner or shareholder who personally guarantees a business debt can become liable for it as well.

Taxing LLCs vs. Taxing Corporations

The IRS treats these business entities differently. When it comes to LLCs, the IRS allows them to choose whether to be taxed as partnerships or corporations. Essentially, LLCs can select whether members’ profits are taxed as individual income or taxed twice as corporate income.

Corporations are taxed differently depending upon which type they are. C Corporations are separate taxable entities, which is why their income is taxed twice: Once as corporate income, then as shareholder income (remember that corporate double taxation is the price for nearly impervious liability protection).

Maintaining LLCs & Corporations

A final factor that isn’t as often discussed is what it takes to legally maintain these companies. LLCs are much easier to maintain because they have the fewest formal annual reporting requirements to meet. Corporations, on the other hand, are obligated to hold meetings and file minutes and annual reports to remain compliant.