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Is an LLC better than a corporation?

LLCs and corporations limit your liability, with corporations providing the most protection from lawsuits. Corporations have their downsides too, however. You should weigh the pros and cons of the different business structures in Virginia to find the right match.


With an LLC, you can choose how you want to pay taxes: as a sole proprietorship, partnership or corporation. Corporations are subject to double taxation whereas LLCs aren’t. There are two types of corporations: S and C. S corporations aren’t taxed twice like C corporations are.

In Virginia, you can tax an LLC like an S corporation if it has more than one member. S corporations can only have up to 100 shareholders, and those shareholders must be U.S. citizens. C corporations have no limitations on how many owners they can have.


Business formation and planning is easier with an LLC because there is less structure involved. To create an LLC in Virginia, you file Articles of Organization with the Virginia State Corporate Commission. It costs $100 to file your Articles of Organization. You can file online for convenience or by paper if you prefer.


Both an LLC and a corporation protect you from liability unlike a sole proprietorship. However, there are certain situations in which you could have personal liability with an LLC. If you or the government dissolves the LLC, you become liable for business operations. Situations in which your LLC could automatically be dissolved include the following:

  • You don’t report the filings.
  • A member transfers 50% or more of the profits in a 12-year period.
  • A member withdraws from the LLC or dies.
  • The LLC merges with another business.

In the last two situations, you can prevent your LLC from dissolving by adding relevant provisions to your operating agreement that enable it to continue operating as an LLC. This makes it more convenient on you as you won’t have to re-register the business.

Corporations are more expensive and require more structure than LLCs. If your business is small and you don’t intend to go big fast, then you may find an LLC the better choice.


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