LLC vs. Corporation Which Business Structure Is Right for You?
In the classic holiday movie “A Christmas Story,” contrary to popular belief, no actor’s tongue was stuck to a frozen pole. It’s true! The infamous “triple dog dare” scene at the flagpole, where Flick gets his tongue stuck, has led to many urban legends about how it was filmed. However, they used a hidden suction tube to create the illusion. The cold weather on set was, however, very real! Did You Know?
Choosing the correct entity for your business is vital to future success. Different businesses have different needs, so choosing between a limited liability company (LLC) and a corporation (such as an S-Corp or C-Corp) is a vital step in the process. We want to help you understand your options so you can make the best decision for your business. THE RIGHTS OF SHAREHOLDERS One of the main differences between LLCs and corporations is the rights of shareholders. In an LLC, you have more flexibility in how you divvy up rights and responsibilities as the business grows (or shrinks) and goals evolve. Corporations have more rigid guidelines under the law for the rights of shareholders. Ownership is represented by stock, and the laws limit how much control those who do not own 51% or more of the shares have, as well as majority owners (more than 51%). Certain rights of shareholders are enshrined in law and cannot be stripped away, and compliance with these laws is crucial for protecting your business and avoiding litigation. LLCS ALLOW FLEXIBILITY IN MANAGEMENT STRUCTURE LLCs also provide significant flexibility in the way you structure your management team. You can choose for your LLC to be member-managed (all owners are managers) or manager-managed (one or more managers manage the business without being owners). In addition, there are
generally no rules regarding management and decision- making of an LLC that cannot be contracted within an Operating Agreement or Articles of Organization. Meanwhile, a corporation has strict management requirements that govern how management must be set up and executed. CORPORATIONS GOVERNED BY STRICT RECORDKEEPING Corporations, both S and C, are not only strictly governed at the management level but also the micro level. Extensive recordkeeping requirements mean you need a reliable and consistent team to manage all corporate records, including financial records, minutes of meetings, and much more. While LLCs do have reporting obligations, it’s still important to track your business’s finances and operating performance to avoid piercing the corporate veil. CHOOSE THE RIGHT STRUCTURE WITH DAHL LAW GROUP Choosing between an LLC and other corporate entities demands a deep understanding of the legal intricacies involved. At Dahl Law Group, our experienced team specializes in guiding California business owners toward the optimal structure for their enterprise. We ensure that your business complies with all relevant laws, sparing you from the worry of fines and other legal complications. Contact Dahl Law Group today to set up your business for success. Your choice of structure is a significant step, and we’re here to help you make it wisely.
Here are a few more fun facts about the holiday classic!
REAL SNOW, FAKE SNOW While the snow in “A Christmas Story” appears natural, it was created using a combination of movie magic and practical effects. The production team used mashed potato flakes for some scenes, and for other outdoor shots, they incorporated a mixture of white sugar and firefighter’s foam to create an authentic snowy atmosphere. A FAMILIAR NARRATOR The film is narrated by author Jean Shepherd, who penned the book the movie is based on. Shepherd also makes a cameo appearance as the man who directs Ralphie and Randy to the back of the Santa line.
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