What Are the Benefits of Incorporating a Business Versus Forming an LLC?

If you’re starting a brand-new business in or around Las Vegas, one of the most vexing questions can often be whether your business would be better served by forming an LLC or a corporation. It helps to compare the relative advantages of each business structure so you make the best choice to suit your business both now, and in the future. A good incorporation lawyer is also critical to get things set up as quickly and smoothly as possible.

The Advantages They Share

Whether you form your business as an LLC, an S-Corp, or a C-corp, you’ll net certain advantages overall compared to forming your business as a sole proprietorship. The most important advantage is the limited liability protections that come from a corporate or LLC structure, which protects your individual assets should the business wind up accruing debts it cannot pay.

Nevada also extends charging order protections to both LLCs and to corporations with less than 75 shareholders, ensuring that small businesses with these structures cannot be forced to liquidate assets in order to satisfy a judgment against the organization.

The Pros and Cons of Forming an LLC

The great news about LLC formation in Nevada is that it’s a fairly quick and easy process, and it can be a great path forward for a business which will only ever has a single owner. LLC formation requires the filing of Articles of Organization, which assign roles and duties to each member of the LLC.

However, there are some drawbacks to LLC formation. Unlike a corporation, a Nevada LLC can’t exist in perpetuity. A sunset date has to be specified in the Articles of Organization. Additionally, LLCs are taxed as pass-through entities, meaning that all profits from the business appear on the members’ personal tax returns.

The Pros and Cons of Forming a Corporation

Complexity

Corporations have some added legal requirements in Nevada compared to LLCs. Corporations are required to issue stock, for example, even if every share of the corporation is solely owned by a single person.

However, the issuance of stock is an excellent upside to the corporate business structure. That’s because it’s relatively easy and straightforward to issue new stock, which makes it easy to offer potential investors a partial share of the company. Shares can be sold or transferred, and the business entity continues to exist even after the death of one or all of the current shareholders. If your business grows large enough, shares can even be publicly traded.

Tax Benefits

Corporations are divided into C-corporations and S-corporations for tax purposes. S-corporations function much like LLCs in that they function as pass-through entities, while C-corporations are considered separate entities from their owners for tax purposes. Shareholders of C-corporations are taxed only on the salary they draw from the company, which can limit personal income tax liability.

The Role of a Good Incorporation Lawyer

A good incorporation attorney can help guide you to make the best decisions for your new company in both the short and long term. A good attorney can also ensure that the paperwork to structure a business entity is filed quickly and correctly, reducing headaches and maximizing speed to launch, and helps with ongoing headaches like navigating employment laws, ensuring compliance with state and federal law, and much more.

Your Vegas business deserves the best start it can get. Schedule a consultation today with the excellent attorneys at Hutchings Law Group in Las Vegas, NV.

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