Introduction: What Is an LLC Corporation?
Many entrepreneurs wonder: what is an LLC corporation? The term combines two distinct business structures—LLC (Limited Liability Company) and corporation—but it’s often used to describe an LLC that chooses corporate taxation.
Legally, an LLC is not a corporation, but it can elect to be taxed as one. This hybrid approach offers business owners flexibility, limited liability, and tax advantages—making it a popular option in the U.S.
Understanding LLCs and Corporations
To clarify what an LLC corporation is, it helps to compare the two structures:
What Is an LLC?
A Limited Liability Company (LLC) is a legal business structure that offers:
- Limited liability protection for its owners (members)
- Pass-through taxation (by default)
- Flexible management structure
- Fewer formalities than a corporation
What Is a Corporation?
A corporation is a separate legal entity from its owners (shareholders) and offers:
- Strong liability protection
- Corporate taxation
- Structured governance via directors and officers
- More compliance and recordkeeping
So, What Is an LLC Corporation?
When someone says “LLC Corporation,” they typically mean an LLC that:
- Has the legal structure of an LLC, and
- Has elected to be taxed as a C-Corporation or S-Corporation
This election is done via IRS Form 8832 or Form 2553, allowing the LLC to be taxed as a corporation while maintaining its flexible LLC structure.
Benefits of an LLC Corporation
- Limited Liability: Protects your personal assets from business debts
- Tax Flexibility: Choose default pass-through taxation or corporate taxation
- Business Credibility: Adds professionalism to your brand
- Fewer Formalities: Avoids many requirements corporations face
- Custom Profit Distribution: Allocate profits independent of ownership share
How to Form an LLC Corporation
Here are the steps to start an LLC and elect corporate taxation:
- Choose a Business Name – Unique and state-compliant
- File Articles of Organization – With the state agency
- Appoint a Registered Agent – For legal correspondence
- Create an Operating Agreement – Define roles, rules, and ownership
- Obtain an EIN – From the IRS for banking and tax purposes
- Elect Corporate Taxation – File Form 8832 (C-Corp) or 2553 (S-Corp)
- Stay Compliant – File annual reports and pay required fees
When Should You Elect Corporation Taxation?
You should consider electing corporate taxation if:
- Your business earns substantial profit
- You want to retain earnings in the business
- You want to reduce self-employment taxes
- You’re planning to attract investors
Always consult a tax professional before changing your tax status.
Common Myths About LLC Corporations
❌ “An LLC and a corporation are the same.”
Truth: They are distinct legal structures but can share tax treatments.
❌ “LLC Corporation is an official legal term.”
Truth: It’s a colloquial term. The entity is still legally an LLC.
Final Thoughts
Now that you understand what is an LLC corporation, you can make better decisions for your business. It’s a flexible structure with customizable taxation and liability protection—ideal for startups, freelancers, and growing companies alike.
