If you are issuing memberships to passive investors who will not be participating in the management of the LLC, you will have to qualify for one of several exemptions available from state and federal securities law. Many states restrict this type of partnership to professionals, such as lawyers, accountants, architects and healthcare providers. This kind of entity is a recent hybrid and is not yet available in all states. In states where it does exist, some restrictions apply. It is a legal entity separate from any of the people who own, control, manage or operate it.
Corporations also enjoy corporate tax advantages.
Only corporations have the legal framework to issue ownership interests as shares of stock. Under state law, formal rules apply to the operation of a corporation. Owners must meet legal requirements for stock registration and paperwork. Corporations are created when Articles of Incorporation are filed with appropriate state agencies. For more information on this topic, see How-To Understand Corporations.