Limited Liability Corporations
A limited liability corporation is a bit easier to set up than a corporation is, though this type of entity does require that you file annual reports and have a meeting of the members. A limited liability can be set up to follow a corporate structure or a partnership structure. This entity uses an operating agreement rather than bylaws. The operating agreement dictates how the business is run. For example, how managing members may be added, how to remove a member or managing member, how profits are to be disbursed, and rules for annual or more frequent meetings.
The tax structure is also better for most small companies. Instead of the owner being taxed as a corporation and then, being taxed again as an employee, the profits filter down to the managing members and members, and are then taxed as income to the individuals.
A limited liability corporation also has other limits. While it gives the owner the protection of a corporate veil, it is pierced more easily. For example, if an owner receives a line of credit or a credit card and personally guarantees it, the corporate veil does not protect that member for being sued personally for default on that loan.
You can set up your limited liability corporation as a partnership instead of a corporation. Like an LLC, the LLP is taxed as the personal level: income passes through to the members. In a limited liability partnership, a member could be an individual or another company.