When planned properly the entity structure provides the owner(s) privacy. If you are a business owner, then you know that this is extremely important.
Personal asset protection.
Both corporations and LLCs allow owners to separate and protect their personal assets. In a properly structured and managed corporation or LLC, owners should have limited liability for business debts and obligations. Corporations generally have more corporate formalities than an LLC that must be observed to obtain personal asset protection. Please note that we are not attorneys and we can’t and don’t provide legal advice.
Additional credibility and name protection.
Adding “Inc.” or “LLC” after your business name can add instant legitimacy and authority. Consumers, vendors, and partners frequently prefer to do business with an incorporated company. In most states, other businesses may not form an entity or use a trade name that is the same as your corporate name. This benefits the business legally and helps in brand-building and marketing.
Corporations and LLCs can continue to exist even if ownership or management changes. Sole-proprietors and most Partnerships just end if an owner dies or leaves the business.
An LLC is taxed at the same rate as a sole proprietorship while providing limited exposure to personal liability. Though profit and loss typically pass through an LLC and get reported on the personal income tax returns of owners, an LLC can also elect to be taxed as a corporation. When an entrepreneur sets up a corporation and does not appropriate tax elections, he or she is taxed on both the individual and corporate levels.
Both corporations and LLCs may deduct normal business expenses, including salaries, before they allocate income to owners.