LLC or INC – Which do you Choose?
You're about to open a new business and everyone tells you that to protect your personal assets from being taken for company debts, you need to organize as a legal entity. But under what legal format should you use to set up your business – a limited liability company or a corporation? What is the difference between these two business operation models and why would you pick one over the other?
It should come as no surprise that there are certain benefits that can be gained and drawbacks that will also come along with each decision. And once the selection is made, when you might think you're home free, unfortunately that only begins a larger, more detailed list of questions that should be answered to create the rules under which the entity is to be operated. (For example, were you aware that an LLC could be member-managed or manager-managed? Yes, there is a difference!)
Businesses Act by Passing Resolutions
In the corporate world, businesses appear to run seamlessly because the transactions between companies are documented in writing, having been pre-approved in resolutions adopted by their respective governing or managing bodies. Even small companies need resolutions prepared for banking, buying, and selling assets, and other transactional use. Further, anyone actively engaged in business must recognize that there will be times that will require the interpretation of legal terms in a proposed contract that can be best served by seeking a lawyer's advice and counsel.