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Related Articles

What are the Main Differences between an LLC and an S-Corp?

What Is a C-Corporation?

What Is an LLC?

What Is an S-Corp?

Which Type of Company Incorporation is Right for You?

 

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TopConsumerReviews.com provides unique articles that you won't find anywhere else on the internet. These articles are designed to help you make the most informed decisions possible.

What are the Main Differences between an LLC and an S-Corp?

Perhaps you've already decided to shift out of sole proprietorship or general partnership status. Friends, acquaintances or (bitter?) experience itself might have alerted you to the personal financial risks of sole proprietor or partnership status in business. Advice might come from all directions: From well-meaning friends, acquaintances, other business owners, even relatives...with no business background! The limited liability corporation, or LLC, and the S-corp status may have been suggested to you by one or more interested parties. Thoroughly evaluating the pluses and minuses of the two types of structure is critical to making an intelligent decision.

So what are the main differences between an LLC and an S-Corp?

First of all, both structures are designed to limit personal liability relative to taxes and business debt.

An LLC, or limited liability corporation, is much more like a general partnership or sole proprietorship than a corporation. The owners declare the profits from the business on their own tax returns. No corporate return is required.

An S-Corp is a corporate structure that the Internal Revenue Service assigns a special status. "Subchapter S" status allows a corporation to avoid filing a corporate tax return, reporting instead any profits or losses on the personal return(s) of the owner(s). Otherwise, establishing an S-corporation means jumping through all the administrative hoops that federal, state and local governments require of C-corporations.

An S-Corp must be registered with state, and possibly, local authorities. Filing articles of incorporation and establishing by-laws are necessary steps. Shareholders have to elect a board of directors. Regular meetings must be calendared for both directors and shareholders, and minutes from these meetings must be recorded. In addition, like a C-corporation, an S-corporation must comply with any state or local business licensing requirements. Compliance with all these regulations usually means retaining legal counsel, something an LLC may not need to do to set up shop.

Neither the LLC nor the S-corp structure requires filing a business tax return. Both LLC owner-members and S-corp owners declare business income on their personal returns at tax-filing time.

As a distinction, S-corp owners are also shareholders, and shareholders who work for the company are required to pay themselves a salary that is in line with industry salaries for similar work. The owner pays income tax on that salary, but may or may not owe any taxes on the company's profits. On the other hand, LLC owners pay self-employment tax on 100 percent of the company's net income. Needless to say, this can create a burden.

Also on the downside for the latter structure, LLC means not only limited liability but limited life: If one of the owners dies -- or even goes bankrupt -- the LLC is automatically dissolved. This can be disruptive to business, especially for longstanding clients and employees. An S-corp, as a corporation, quite literally has a life of its own... legally speaking. The vicissitudes of mortality create no obstacle to the operation of an S-corp.

Taking a good, long look at the pros and cons of the S-corp and the LLC is crucial. Seeking legal advice on which structure best suits your circumstances is good practice.

City Council to discuss town's incorporation, litigation threats

BELOIT - The Beloit City Council will meet in closed session on Monday to discuss the Town of Beloit's pending incorporation application, according to the Nov. 19 meeting agenda. According to the agen...

Published:  Fri, 16 Nov 2018 05:56:00 GMT



CLPS Incorporation Announces Listing Transfer to the NASDAQ Global Market

SHANGHAI, Nov. 13, 2018 /PRNewswire/ -- CLPS Incorporation (the "Company" or "CLPS") (CLPS), a leading information technology ("IT") consulting and solutions service provider focusing on the ...

Published:  Tue, 13 Nov 2018 13:36:00 GMT



Epc Industrie Ltd. - Incorporation Of A Subsidiary Company

We refer to our letter dated 15th May, 2018, wherein we had informed that the Company had, on 15th May, 2018, entered into an Agreement, to form a Joint Venture Company in India ("NewCo") with Top Gre...

Published:  Fri, 16 Nov 2018 05:43:00 GMT



India: Company Incorporation procedure simplified

The increased level of business transactions in a country helps in growth and development of a nation. One of the most preferred vehicles for carrying out business operations is the incorporation of a ...

Published:  Thu, 15 Nov 2018 16:22:00 GMT



This Desert Life: Incorporation or bust

To incorporate or not to incorporate, that was the question town residents had to answer in 1988. They chose the former, passing what was known as Measure K, which grabbed 84 percent of the vote on No...

Published:  Thu, 08 Nov 2018 14:38:00 GMT



Statistical Natural Language Processing Market to Make Great Impact in Near Future by 2025 | Apple Incorporation, Dolbey Systems, Google

Nov 10, 2018 (Heraldkeeper via COMTEX) -- HTF MI released a new market study on Global Statistical Natural Language Processing Market with 100+ market data Tables, Pie Chat, Graphs & Figures spread th...

Published:  Fri, 09 Nov 2018 23:21:00 GMT



State closer to town's incorporation answer

MADISON ­- Town, city and county officials once again went to battle over the fate of the Town of Beloit's petition to the Wisconsin Incorporation Review Board on Tuesday in Madison. Officials from pa...

Published:  Wed, 14 Nov 2018 06:04:00 GMT



Kadesh Incorporation Issues Voluntary Nationwide Recall of Puriton Eye Relief Drops Due to Non-Sterile Production Conditions

Kadesh, Inc. of Garden Grove, CA is voluntarily recalling all lots of Puriton Eye Relief Drops, 0.5 oz. (15ml) bottle, UPC 7 36972 1679 0, to the consumer level. During a recent FDA inspection, invest...

Published:  Wed, 07 Nov 2018 11:44:00 GMT



New Study Focusing on Cloud Communication Platform Market Growing CAGR +27% with Focusing Key Players- Xura Incorporation, Genband US LLC, 8x8 Inc.

Split by product Types, with sales, revenue, price and gross margin, market share and growth rate of each type, can be divided into, Unified Communication and Collaboration (UCC/UCaaS), Web Real-Time ...

Published:  Thu, 15 Nov 2018 23:07:00 GMT



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