Difference Between LLC and INC


LLC and INC are two types of  business structures. When starting a business, it is very important to think about the nature in which it will operate. There are various options as far as choosing the name, getting recognition from the state, protecting the assets and having the best tax privileges is concerned. The two most popular way of structuring a business are LLC and INC which are explained in this article. Both have their own set of features with advantages and disadvantages, and this articles intends to highlight the differences between the two to make it easy for you to choose between the two depending upon your requirements.


LLC is referred to as Limited Liability Company. It is set up by one or members who operate according to laid out agreement. It is also called a pass through business as all the losses and profits are passed on to the members in the ratio of their partnership and each member pays taxes according to his earnings.


INC, or an Incorporation as it is called, is a different type of organization where all profits and losses are reflected back upon the corporation itself and not upon owners. It is an organization that is governed by a board and this board oversees all the operations of the organization. Board is made up of some important members known as directors. A corporation is taxed differently than an LLC, on a tax based upon corporations.

Difference between LLC and INC

There are great differences in structuring and working of a LLC and an INC which are enumerated below.

While a LLC does not have any technical employees, corporations have employees in different levels and all employee paperwork has to be maintained all the time.

LLC is taxed as if the income out of business was a personal income and the members are taxed in accordance with their income from the organization as a personal income. However, in case of a corporation, the drawings by directors are taxed on a personal level as well as on the level of corporation which is a sort of double taxation.

LLC operates with cash and credit while INC operates by issuing stocks and stockowners are actually partners in the organization. INC can easily raise capitol by issuing stocks.

LLC involves much less paperwork and thus much cost and time is saved. Corporations also are required to hold annual meetings of the board of directors and minutes of such meeting are published in the interest of the stockholders.


• Both LLC and INC are types of organizations involved in business.

• Both provide owners with protection from liability.

• While LLC is free from paperwork and legalities, there is much paperwork in corporations.

• All profits and losses are transferred to the members in LLC, and they pay taxes on their income, whereas in the case of a corporation, all profits and losses are of the organization and owners pay taxes on their drawings and corporation is also taxed on income and loss.