San Francisco, CA asked in Business Formation for California

Q: What's the better form of legal home business: a corporation or an LLC?

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1 Lawyer Answer
Glen D. Duvel
Glen D. Duvel
  • Santa Ana, CA
  • Licensed in California

A: Both a corporation and LLC provide the same basic benefits, most notably the protection of your individual assets from your business assets in the event of a lawsuit. As to which is better, there are many differences. Perhaps the most meaningful difference for a home business is ease of use. In order for a corporation to remain effective, corporate meetings and minutes of those meetings must be conducted annually. If those are not done, a plaintiff could "pierce the corporate veil" and get at your personal assets. An LLC does not require any such meetings or minutes. So, after the entity is properly established, the LLC does require the ongoing maintenance to the degree of a corporation.

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