Inc .vs. LLC?

The main purpose of creating an LLC or Corporation is to protect yourself personally and your personal assets from any business related liabilities. If you follow the legal requirements you will be protected well unless some technicalities are found that 'pierce' the corporate veil of protection. If you're paying yourself through an LLC you don't need to treat it as payroll...it is a distribution to members and reported on a K-1 or a Schedule C if it's a one member LLC. If you're a corporation you will need to pay yourself as payroll and deduct and pay withholding taxes as you are an employer. I might add, even in an LLC, if you hire outside help who are not members, you will have to do the same...create payroll and pay the required payroll taxes.

Inc stands for incorporated, which means the business is set up as a corporation in their state (or Delaware or Nevada). LLC stands for limited liability company. Corporations are owned by shareholders, whereas LLC's are owned by members.The form of a business tells us how the owners share liability. Shareholders of a corporation share almost no liability for the actions of the business. Members of a LLC share someliability (but nota lot) for the actions of the business. So, for example, if your vendor is incorporated, then you know you cannot sue the owners personally for breaching your contract. On the other hand, if you vendor is an LLC, then you may be able to sue the owners personally for breaching your contract.