Corporations have been around for centuries and act as a legal entity that separates an owner from their business. As a separate entity, a corporation pays taxes and can be held liable for its actions. This separation shields owners from personal liability. Corporations require extensive record keeping, operational processes, and reporting, but are internationally recognized entities and can issue stock to attract outside investment.
Limited liability companies were first introduced in the 1970s. The concept has attracted many business owners because they offer liability protection, flexibility in taxation and management, and minimal record keeping. Although they are not internationally recognized, they do avoid corporate taxes and provide more ownership and distribution options.