Starting a business in Louisiana is a difficult endeavor. Simply formulating a product or service that customers will purchase and use is hard enough without thinking about the aspects of business law that must be addressed. However, they must be considered as even the most viable idea for a business can be hindered or outright ruined by failing to use the correct business form. Knowing whether a corporation or a limited liability corporation (LLC) is preferable is a key decision.
With an LLC, the business is flexible and simplified. If, for example, the business plans to own property, an LLC can prevent the business owner from paying double taxes. With an LLC, there is the pass-through option for its owners and they can be shielded from this issue. A corporation could be preferable for several reasons. When there are numerous investors or an initial public offering is planned, the corporation will have shareholders who will want proof of the stock they have purchased. Only corporations can sell stock in the business.
Stockholders can also be employed by the business making it possible that they will receive certain benefits like health coverage and they can get a salary. With health coverage from a corporation, it will not be labeled as income. An LLC is different as a portion of the benefits can be deducted when the employee pays for them. Corporations can offer benefits such as stock options to retain employees while an LLC cannot do that.
These are just some circumstances where an LLC and a corporation differ. The individual goals and structure of the business are critical to making the determination as to which is a better option. Having legal help is a must. A law firm that specializes in business law can provide advice and guidance as to how best to craft a business. Before making any decisions, calling for legal help is imperative.
