An LLC meaning limited liability corporation will allow you to share liability between you and one other person should your company ever be sued for something, however it also usually entitles both you and the other person to equal "voting" rights and resource holdings (capital or cash) .

If you are just starting a new business venture with one other person a LLC may be the way to go if you already have something in place.

However keep in mind no corporate barrier will protect you should you be sued personally for personal negligence or the later.

Kind Regards,
XDS
Source(s):
My Brain.

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This is tough to answer without knowing more about your specific situation. Some things to thing about are:
1. How many owners will there be?
2. Do you anticipate a need to issue common stock, or plan to go public?
3. Different states have different rules--depending on where you're located that may be restrictions as to the forms of busisness ownership available to different businesses.

Mahalo has resources that may help. We have How to Form a C Corporation as well as How to Form an S Corporation, and How to Choose Between an S-Corporation and a C-Corporation. We also have some page specific pages on the LLC regulations in
California, Nevada, and Delaware.

This is a decision that you'll want to make with your accountant and attorney, but a little background will help.
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LLC is a flexible form of business which is great for start-ups since it blends elements of both a partnership and an overall corporate structure. If you're planning on going into business with only yourself as the owner, I'd recommend an LLC since a corporate structure offers limited liability as well, but without the flexible tax benefits of a simple partnership.

Of course, before stepping into a business venture it is best to research both the advantages and disadvantages of an LLC.
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What's the difference and why do these differences matter...

If there were two different types of initials that commonly followed the name of a business it would be "LLC" and "Inc."

Now, to the common person, there is no difference between these two business classifications.

Granted, while there are a certain number of similarities between the two there are also a number of differences as well.

For many partnerships or sole proprietors, selecting whether or not to form a corporation can lead to somewhat of a quandary: which entity would be most beneficial to form.

The best way to answer this question would be to first understand the differences between the two.

From a clear understanding of the corporation vs LLC discussion, selecting the classification that would best fit a particular business situation becomes possible.

Key Differences: Corporation vs LLC
So what are the main differences between starting an LLC and a forming a corporation? Like a corporation, an LLC provides personal liability and asset protection.

Also, an LLC can provide the ability to conduct business in the name of the LLC as opposed to the individual.

Best of all, an LLC is not subject the taxation of a corporation as an LLC's taxation rules are similar to those which are applied to individuals and sole proprietorships.

LLC's also come with a number of structural and organization benefits. Corporations, unlike an LLC, are required to have a board of directors and must establish bylaws for the governance of the corporation.

Those who make up the corporation are called "shareholders" whereas those who make up an LLC are known as members. Within a corporation, the shareholders vote on who will comprise the board of directors.

This, obviously, does not occur with an LLC as an LLC is not mandated to have a board of directors.

Differences in Taxation
Another major difference in a Corporation vs LLC centers on the issue of taxation as an LLC is subject to "pass through" taxation whereas a corporation will be taxed as a business entity. Keep in mind, the earning from an LLC are considered self-employed income.

That means that those who receive income from an LLC are required to pay self employment tax. With a corporation, this is not necessary although a corporation will be required to pay business taxes that an LLC is not required to pay.

It would not be wise, however, to totally dismiss the value of forming a corporate entity. Corporations also have access to a number of benefits that when forming an LLC, you may not be able to offer.

For example, the employees of an LLC are not going to be offered stock option plans or certain retirement benefits.

While this may not seem like much on the surface, employee retention – particularly the retention of good employees – is critical to a company's success. So, it may not be in the best interest to remain an LLC when employees are jumping to the "greener pastures" offered by a corporation.

Honestly, the differences between a corporation vs LLC are mostly structural and tax related. One is not better than the other per se. Rather one is better than the other based on individual circumstance and business plans.

With that said LLC!
Source(s):
about.com

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There are MAJOR advantages to starting a C-Corp vs. and LLC or S-Corp:
- C-Corp is a separate entity and can protect your from liability if you set it up properly
-C-Corp can acquire a credit rating and acquire corporate credit

With an S-Corp or LLC, all income and liability devolves upon you as an individual. Even though it is more expensive to run a business as a C-Corp, if you have any interest in protecting yourself from liability and creditors and you want to acquire corporate credit that you aren't personally responsible for, you should go with a C-Corp.
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