Are Limited Liability Companies Considered Corporations?

An LLC, or Limited Liability Company, is a business structure that offers the best of both worlds: the liability protection of a corporation and the flexibility of a partnership or sole proprietorship. This means the owners' personal assets are generally shielded from business debts and liabilities. At the same time, the profits and losses pass through to their personal income tax returns, just like in a partnership or sole proprietorship.

On the other hand, a corporation is a separate legal entity from its owners, who are called shareholders. Corporations have a more formal structure, with a board of directors, corporate bylaws, and shareholders owning shares of stock in the company. Like an LLC, a corporation also provides limited liability protection to its shareholders.

Although LLCs and corporations offer limited liability protection, they're not the same. They differ in management structure, ownership, and tax treatment. LLCs are usually more flexible and easier to set up and manage than corporations, so they are popular for small businesses and entrepreneurs.