What is the difference in S-Corps and LLC?

Answer 1

An LLC is better than an S corporation under some circumstances. In other circumstances, an S corporation is the better choice. In fact an LLC can elect to be treated as an S corporation, if it meets the statutory requirements for an S corporation.

An S corporation has more restrictions that a limited liability company:

* It must not have more than 100 shareholders. * Its shareholders must be U.S. citizens or U.S. residents, and they must be generally be individuals (with some very limited exceptions). * It must have only one class of stock. * Its profits and losses must be allocated to shareholders proportionately to each shareholder's interest in the business. For a growing business, an S corporation offers much less flexibility. But there are some areas, such as FICA taxes which are payable on the income of members of an LLC but not on profits of an S corporation, that favor an S corporation.

Answer 2

LLC and S corporations have many differences. S Corporations can not be owned by non-US citizens, while LLC can. Also all of the profits to an LLC that is not taxed as a corporation are subject to self-employment taxes, while the S Corporation's profits are not.

Answer 3

An LLC is simply an entity (a separate entity, as is any corporation) that is set up by individuals in business to protect themselves from personal liability in the event of a lawsuit. The partners of the LLC (limited liability corporation) must always protect themselves personally by never "breaking the corporate veil", ie: not co-mingling corporate funds or expenses with their personal financial transactions. As far as taxes and the IRS, an LLC is treated as a pass-through corporate partnership. In other words, your earnings or losses from your LLC will pass-through from your corporate tax returns to your personal tax returns. You have to file a form 1065 each year which will include a form K-1 which states the earnings/losses for each member (partner) of the LLC. These amounts are then reported (passed-through) to that LLC members' personal tax return.

Answer 4

It greatly depends on one's jurisdiction (State and/or City in the USA).

In general terms, an S-Corp is more expensive but provides in some cases more protection. An LLC is usually less expensive to make. Additionally, there are restrictions on the number of owners in an S-Corp.

Answer 5

There are several differences of a corporation vs a LLC. Differences between a corporation vs a LLC include separate legal and tax life, separate management and control types, and different fringe benefits.

Answer 6

A S corporation is an election for specific tax treatment for Federal and often state income tax purposes. A limited liability company (LLC) is a specific type of entity created under state law.

A single member LLC is, by default, ignored for tax purposes by the IRS and is treated the same as a sole proprietorship. An LLC with two or more members is treated as a partnership. As a partnership, each item of income, expense, gain and loss is passed through to the partners, at least at the Federal level. The partners do not receive wages but are taxed on their allocable share of taxable income of the LLC. There is no tax withholding on partners or payroll reporting for them. Instead, the partners must file quarterly estimated returns and make payment of estimated taxes, if appropriate.

However, any LLC can choose to be as a S corporation. An S corporation also passes through profits and losses to its owners but also pays wages, which are subject to regular withholding and reporting requirements even if paid to the owners.

Answer 7

Difference to be Corporate and LLC?