The LLC is the #1 Choice for Small Business Owners

A corporation must have a central body of management structure.  This is accomplished with a Board of Directors.  Every corporation has a Board and directors are elected by the shareholders to serve board terms.  The Board has the authority to manage the company.  Generally the Board will hire officers to execute the day to day operations based on the overall decisions agreed to by the board.  Shareholders in their capacity as shareholders do not have management authority.

The LLC is a flexible shell when it comes to management.  There are no required structures and a central management body is not required.  A limited liability company can be member managed - here, the owners (members) have management authority by virtue of being members.  However, this entity can also be set up similar to a corporation and can create a Board of Managers as the management authority.  In summary, an LLC can start with a blank slate when it comes to management structures and can define how it wants to be governed based on the specific circumstances.

Both entities issue a unit of ownership to its owners.  For a corporation, shares of stock are issued while membership units are given by an LLC.  For a corporation, every share must represent an identical unit of ownership.  For an LLC, there is the option to define different rights and obligations to members separate and apart from the membership unit. Corporate shares can be publicly traded if the business ever gets big enough to want to go public. There is no option for public markets for an LLC.  The LLC is generally used for small private businesses.
 

A third of the benefits of an LLC is that it is a flexible entity when deciding how the business will be managed. The members of a limited liability company can choose between two simple management structures: (i) member managed or (ii) manager managed. The LLC laws afford this benefit of an LLC by allowing members great flexibility in deciding how they want the limited liability company business to be managed and what rules to impose upon the LLC when it comes to governance and management.

The corporation laws of each state generally mandate that a corporation hold certain meetings and document corporate decisions with shareholder or director votes and resolutions.  The LLC is not legally required to maintain as much paperwork or hold mandatory meetings, but it is always a good idea to engage in some governance and record keeping. But, an LLC is preferred by business owners because the owners can focus more on operating the business without worrying about a lot of formalities or maintenance.