INC vs. LLC – Whats Best For Your Business?
You are finally making a decent amount of money online and are looking to make the change from your personal name to an established business. You have a couple choices here. Will you start an LLC, or an INC business? While this may seem like a very simple question, it can get quick confusing, and your decision will be based upon what type of business you run. Each of these business entities will cater to your business differently. I have compiled a great list of sites for you to read through to help on your decision.
– Choosing the Best Ownership Structure for Your Business
Nolo has created a great 4 page article, which covers some of the key areas to help you decide between an LLC or an INC. These covered areas include “the potential risks and liabilities of your business”, “the formalities and expenses involved in establishing and maintaining the various business structures”, “your income tax situation”, and “your investment needs”.
– Inc. vs. LLC: Which legal structure suits your business?
BankRate was probably the best article write up I came across. It gives a run down of the advantages and disadvantages of running your business as an LLC or INC.
– US Business Law & Taxes
About.com has also compiled a list of great resources which cover Starting Your Business, Financing Your Startup, Business Taxes, Business Accounting Records and Finding a Business Location.
The end result of most of these articles are to sit down and talk with your attorney or accountant to make the best decision. That is what I did… My goal is to specialize in making money, not to have to go to school again and read hundreds of pages on LLC vs. INC. It’s most likely your attorney or accountant already have an idea of how you are making money, and if not, explain it out to them. Once you go over everything, they should be able to tell you which business entity is right for you. You specialize in your job and your attorney and accountant specialize in theirs, before racking your brains on all this information, get their opinion as well.
If you are still looking for more information on how to form an LLC or start your or corporation, you may find LegalZoom, MyCorporation and The Company Corporation useful. In my last article on “How to Form an LLC for Your Business“, I did a quick review on each of these companies and the costs associated to filing and starting with your new business entity. In addition to filing your papers, they also cover many question you might have on making the change over to an LLC or INC.
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21 Replies to “INC vs. LLC – Whats Best For Your Business?”
I'm thinking of setting one of these up soon myself and was just wondering what your choice was and how you came about your decision.
I went with Inc. It was advised by my accountant and attorney. Which I was happy with, because I think it sounds a lot better than LLC anyway. 🙂
Yea INC is way more badass sounding haha. Yea definitely something I will have to talk with someone about though.
Good article, Zac. Something for your readers to seriously consider. You don't want to organize too early if you have no assets, no income and no clue about making money online. On the other hand, you don't want to wait until you're 6 months into netting $10K per month. But the really important part is to get an attoney or CPA who knows his or her stuff when it comes to entity formation. That way when you're explaining to him or her what you do and how you do it, they can come up with entity solutions that will work for you.
@ Nick: wrong questions to ask. Your choice of entity should be based strictly on you & your business. If you're serious about setting up a formal business structure, make an appointment with a lawyer or a CPA who has experience in forming entities.
Wrong questions to ask? I was merely interested in what he chose… is that ok? I already have an appointment set up. I hope you didn't think I was going to make my decision based off of what his choice was.
You should base all decision off what I say, Always! Haha, jk. Glad you are on your way to setting up your own company. Congrats!
Zac, nice post with great resources to read from.
I had to face with the same issue few years ago.
My advisers urge me to go with INC and so we did. In the years after I found our that this was a good decision to make.
To confuse people even more there are hybrid entities. You can form as an LLC then elect to be taxed as an S or C corp. That can be a good option for online business as well. Like you say though, need to talk to a CPA and lawyer.
There are also even partnership corporations, to form a new one. I worked with another company, where we formed a new company and created a new LLC. This was now a new separate company which was created by two others. It can get confusing.
Helpful resources. 🙂 Thanks!
Thanks for the resources. Maybe one day I'll form my own INC or LLC.
I currently own a Inc, My EG Inc. and I am tottaly happy with a Inc.
Great Post. I chose Inc. for the amount of Volume I push.
I went with INC as well. Did the research and my accountant advised it as well. Zak, maybe you could talk about the end of year distribution. That was the big advantage, but I think you need to be careful with this… Not really sure though.
Im glad you devoted a post to this topic – it seems that the business structure that people should use is always one that is misunderstood. Take a look at what your want to accomplish with your business, you can always change later.
Someday I'll get to the point where I have to change my tax status. I'll just keep climbing the ladder until then.
I have an LLC how do I convert that to an INC ..is there a process
I have an INC. that i want to change over to LLC. do you think it a good idea it a record lable very small. if you do think it a good idea how do i switch my INC to LLC keep the company name???????
You have to put a lot of thought into your decisions when running a business! be sure you do your research before you decide anything!
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