INC vs. LLC

[Anonymous]

I currently have an LLC that I started maybe 4 months ago doing internet retail sales. For now it's just a side business that I would like to eventually make my full time job opening up an actual retail location. I was wondering what the benefits of having it incorporated as opposed to keeping it an LLC would be in the short term for business credit etc. 

[Anonymous]

I would also like to know. bump.

[youngman1234]

I own an LLC not for credit purposes because I don't have any intention of scoring a bank or any of my vendors over. I actually did it because in the state I live in you need workers comp insurance if your an Inc. eventhough its just the owners working for the business and no employees. For an LLC as long as the the members are the only people working which in my case they are the only ones, then we don't need to get workers comp. And the insurance is very high and no need.

As for credit, I honestly don't think it matters. Banks just care about revenues, assets, profits. I have got 2 chase business cards for 27k....

Hope this helps....

[mmmagique]

An LLC gives you the flexibility to be taxed as a sole proprietor, an S-Corp or a C-Corp. (if you qualify for the Corps) As far as I can see, an LLC has a lot more flexibility and less yearly requirements than the corps do. 

[baronofthenorth]

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@mmmagique wrote:

An LLC gives you the flexibility to be taxed as a sole proprietor, an S-Corp or a C-Corp. (if you qualify for the Corps) As far as I can see, an LLC has a lot more flexibility and less yearly requirements than the corps do. 

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I agree and think mmmagique is spot on!  The flexability for taxes with the liability protection of the traditional corporate vehicles (C and S-Corp.) sums up the main benefits of the LLC.  It is also more streamlined from a managment perspective, with the tradeoff of not having any stock issued (which could be sold to raise capital in the case of a Corporation).  Having had and operated both an S-Corp. and an LLC, I much prefer the LLC for most situations.  Generally less reports, taxes, and required meetings for LLC's as well.  Single member LLC's are possible in most jurisdictions while single member Corporations are generally impossible to establish with only a single member (usually require minimum of President and Secretary and/or Treasurer).

[Project17]

Purely for business credit a Corp can carry a little more weight in getting credit.. Some actually require a PG if your a LLC no matter what but not for corps.. Like mentioned more paper work and requirements = responsibility and that equals a little less risk of default in some people's minds. And to add some states don't allow Corps to dissolve if debt is owed but a lot allow LLC's to.