Background

• Corporations and LLCs entities created to own and operate businesses. Unlike sole proprietorships and partnerships, corporations and LLCs protect personal assets of the owners from business debts or claims. LLCs and corporations are quite different in how each is owned and managed. A corporation issues shares of stock to its owners who are called "shareholders." Policymaking and management are performed by the officers and directors, who are elected by the shareholders. An LLC doesn't issue shares of stock to its owners, who are called "members."
  
  

Organization

• Members in an LLC can vote to designate one or more of them as "managing members." Managing members have the power to make policy decisions for the company and the authority to implement those policies. Managing members retain an ownership interest in the company, but are given sole responsibility for the operation of the business by the other members.
  
  

Function

• The members or managing members of an LLC can authorize the appointment of officers. An officer in an LLC is an employee who's hired to perform the daily tasks necessary to implement policy set by the members or managing members. Officers have only the amount of authority given to them by the members or managing members of the LLC. Titles given to officers are the same in both LLCs and corporations: president, vice president, secretary and treasurer.
  
  

Formalities

• LLCs have fewer formalities than corporations. Owners can be added to an LLC without having to go through the process of surrendering and reissuing shares of stock. The laws under which corporations are created require them to have at least one officer, while LLCs aren't required by law to have officers. It's this lack of formality and ease of operation that make LLCs an attractive option for many companies.