Inc. and LLC are designations for businesses that regulate how a company is organized, pays taxes and settles outstanding debts. These designations allow business owners to separate their personal property from the business.

Identification

Businesses with the title Inc. are corporations, while businesses with the title LLC are Limited Liability Companies.

Function

Inc.'s have multiple owners, and they issue stock that can be bought to obtain ownership but are considered a single taxable entity. LLC's also have multiple owners, but have a much less formal and simpler organization and are not considered a taxable entity. They do not issue stock, but rather are owned by a group of people who manage the company.

Significance

Because Inc.'s are considered a taxable entity, they must pay corporate taxes on their profits. LLC's, on the other hand, do not pay taxes on profits; the tax is passed on to the owners' personal income taxes.

Benefits

Both LLC's and Inc.'s protect their owners' property from the property of the business. Owners of these companies are not personally responsible for the debt of the business, and their private property cannot be seized should the company or corporation fail.

Considerations

Owners of businesses without these type of designations, such as sole-proprietorships, do not have the same protection for their personal property. If a business should fail, their personal assets can be seized to pay off business debts.

Source:

IncParadise: Frequently Asked Questions About Corporation Entities net

Legal Spring: LLC vs. Inc.