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Delaware LLC and Corporation comparison

Updated time: 11 Jan, 2019, 18:09 (UTC+08:00)
  Limited Liability Company (LLC) General Corporation S-Corporation C-Corporation
Formation Delaware State filing Delaware State filing Delaware State filing. Within 75 days of formation, IRS filing of Subchapter S election is required Delaware State filing. Within 75 days of formation, Form 2553 required to be filed with the IRS
Liability Typically, members not personally liable for the debts of the LLC Typically, shareholders not personally liable for the debts of the corporation Typically, shareholders are not personally liable for debts of the corporation Typically, shareholders are not personally liable for debts of the corporation
Raising Capital Potential to sell interests, contingent upon Operating Agreement restrictions Shares of stock are usually sold to raise capital Shares of stock are usually sold to raise capital Shares of stock are usually sold to raise capital. Venture capitalists and angel investors are typically a good source of funding
Taxation Not taxed at entity level if properly structured. Profit/loss passed through directly to the members Taxed at the entity level and shareholders receiving dividends are taxed at the individual level Not taxed at the entity level. Shareholders are taxed at the individual level for profit/loss Fringe benefits and owners' salaries can be deducted as business expenses. Shareholders may face double taxation
Formalities Less formal meetings and minutes are required; state reporting required Board of Directors, formal meetings, minutes and annual state reports required Board of Directors, formal meetings, minutes and annual state reports required Board of Directors, formal meetings, minutes and annual state reports required
Management Members have an Operating Agreement that outlines management responsibilities Shareholders elect Board of Directors to appoint officers for day-to-day management Shareholders elect Board of Directors to appoint officers for day-to-day management Shareholders elect Board of Directors to appoint officers for day-to-day management
Existence Perpetual unless otherwise specified Perpetual unless otherwise specified Perpetual unless otherwise specified Perpetual unless otherwise specified
Transferability Contingent upon Operating Agreement restrictions Shares of stock are easily transferred Shares of stock easily transferred after observing all IRS regulations and ownership requirements Restrictions on transferring shares of stock.

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