What are the key differences between LLCs and corporations for small businesses?

The key differences between LLCs and corporations primarily lie in their structure, taxation, and liability protection. LLCs provide a flexible management structure and pass-through taxation, allowing owners to avoid double taxation. In contrast, corporations have a more complex structure that includes shareholders and directors, which can facilitate generating capital through issuing stocks but may also result in double taxation on corporate profits.

LLCs limit personal liability, protecting owners' personal assets from business debts. Corporations also offer liability protection, but the formalities involved, such as holding annual meetings, can be more demanding. Small business owners should assess their goals, the nature of their business, and the anticipated growth to determine which structure best aligns with their needs.

It's highly advisable to consult with a legal or financial professional to gain clarity on the implications of each structure before making the decision, ensuring it aligns with long-term strategies.