Introduction: What Is LLC Corporation?
If you’re starting a business, you may have asked, “What is LLC corporation?” While the phrase is commonly used, it combines two separate legal structures: LLC (Limited Liability Company) and corporation.
In reality, an LLC is not a corporation, but it can choose to be taxed like one. This hybrid usage has led to the phrase “LLC corporation” being used informally to describe LLCs with corporate tax elections.
Let’s explore what that really means.
Understanding LLC and Corporation
To understand what is LLC corporation, it’s important to first define the two terms individually.
What Is an LLC?
An LLC (Limited Liability Company) is a business entity that:
- Offers limited liability to its owners (called members)
- Allows pass-through taxation (by default)
- Is easier to manage than a corporation
- Has fewer compliance requirements
What Is a Corporation?
A corporation is a separate legal entity that:
- Is owned by shareholders
- Requires a board of directors and officers
- Has stricter regulations and reporting
- Is taxed either as a C-Corp or S-Corp
So, What Is LLC Corporation?
The term “LLC corporation” usually refers to an LLC that elects to be taxed as a corporation—either a C-Corp or S-Corp—by filing specific forms with the IRS.
- Legal Structure: Still an LLC
- Tax Status: Corporation (if elected)
It offers the best of both worlds—flexibility of an LLC with potential tax benefits of a corporation.
Benefits of LLC Corporation Election
If you’re considering forming an LLC and electing corporate taxation, here are the top advantages:
Personal Asset Protection
Tax Flexibility (pass-through or corporate)
Reduced Self-Employment Taxes (S-Corp)
No Double Taxation (S-Corp)
Less Formality Than C-Corp
Custom Profit Distribution
How to Form an LLC Corporation
Here’s how to create an LLC that can be taxed as a corporation:
- Choose a Business Name – Must be unique in your state
- File Articles of Organization – With your state’s business division
- Appoint a Registered Agent – Receives legal notices for your LLC
- Create an Operating Agreement – Outlines ownership and rules
- Get an EIN from the IRS – Required for banking and taxes
- Elect Corporate Tax Status – File Form 8832 (C-Corp) or 2553 (S-Corp)
- Stay Compliant – Renew annually and pay necessary fees
LLC vs Corporation: Key Differences
| Feature | LLC | Corporation |
|---|---|---|
| Legal Entity Type | Flexible entity | Rigid structure |
| Ownership | Members | Shareholders |
| Taxation | Pass-through or elective | C-Corp (double tax) / S-Corp |
| Formality | Low | High |
| Profit Distribution | Flexible | Based on shareholding |
When Should You Elect Corporate Taxation?
Electing to be taxed as a corporation can be beneficial if:
- You’re earning consistent, high profits
- You want to retain earnings in the business
- You want to reduce self-employment taxes
- You plan to bring on investors or sell shares
Common Questions About What Is LLC Corporation
Is LLC corporation a real business structure?
No. It’s an informal term. Legally, you’re still an LLC that can elect to be taxed as a corporation.
Can a single-member LLC be taxed as a corporation?
Yes. Even single-member LLCs can choose corporate taxation.
Does choosing corporate taxation change my LLC?
Not legally. You’re still an LLC—only your federal tax treatment changes.
Final Thoughts
If you’ve been wondering what is LLC corporation, now you know: it refers to an LLC that has chosen corporate taxation while keeping its original LLC structure. This setup gives you flexibility, liability protection, and potential tax advantages—making it an excellent choice for many entrepreneurs.
