LLC or Corporation?
Running a business is all-consuming, with your focus primarily on your customers and employees. However, you might need help managing the bigger picture—like deciding whether to form an LLC or a corporation, or determining the right time and steps for selling your business.
I spoke with Neil Balmert, a tax partner at DLA Piper, to get some insights. He says the choice of entity is primarily driven by tax considerations.
● LLC (Limited Liability Company): An LLC is generally a flow-through entity, meaning the company’s losses can flow through to the investors, potentially offering tax savings for founders or investors during the startup phase.
● Corporation: A corporation is not typically a flow-through entity. This structure is often preferred by venture capital investors or more sophisticated investors.
Many startups begin as LLCs to take advantage of the flow-through benefits and then convert to a corporation when they bring in outside financing, such as venture capital.
If you have questions about what’s best for your business, give us a call.
Your time is precious. Let’s make it count.
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