Should I be a Corporation or a Limited Liability Company (LLC)- What’s the difference?

Both types of entities provide for personal liability protection in case of lawsuits, bankruptcy, taxes or other governmental liabilities incurred by your business.  The main difference between a corporation and an LLC is that an LLC gives the owners more flexibility in the management of their company without having to adhere to a number of formalities required under the corporate structure.  For this reason, many small businesses opt to use the LLC formation.  However, California does not allow some types of industries to use the LLC formation.  For instance, licensed contractors may only use the corporation entity.  In addition, some financiers may demand a corporate structure specifically because of the formalities imposed on corporations.  Finally, there may be tax benefits in forming one type of entity over the other.  Both legal and tax counsel is advised when selecting the form of entity for your business.