What is the difference between an LLC, corporation, and partnership?

The differences between a Limited Liability Company (LLC), a corporation, and a partnership mainly revolve around their structure, liability, taxation, and operation. An LLC is a versatile business structure that combines the features of a corporation and a partnership. One of the primary benefits of an LLC is limited liability protection, which means that the personal assets of its owners, known as members, are generally protected from the debts and liabilities of the business. This means that members are usually not personally responsible for business debts. An LLC can choose how it is taxed; it can be taxed as a sole proprietorship, partnership, or corporation. A corporation is a more formal business structure recognized as a separate legal entity from its owners, which are called shareholders. Like an LLC, a corporation provides limited liability protection to its shareholders. This means that shareholders are not personally liable for the corporation's debts or legal obligations. Corporations are subject to double taxation; they pay taxes on their profits at the corporate level, and then shareholders also pay taxes on any dividends they receive. Corporations also have more regulatory requirements, such as holding annual meetings and maintaining corporate records. A partnership, on the other hand, is an arrangement between two or more individuals who agree to operate a business together. In a general partnership, there is no limited liability protection, so partners are personally responsible for the business's debts and liabilities. Partnerships are typically pass-through entities for tax purposes, which means that profits and losses pass through to the partners, who report them on their personal tax returns. There can also be limited partnerships, where some partners have limited liability but do not participate in the day-to-day management. Individuals should consider their specific circumstances, including their business goals and risk tolerance, when choosing the appropriate structure. For more information regarding business structures in South Carolina, individuals may wish to visit the South Carolina Secretary of State's website.