When establishing a business, you have the options to select from multiple business entity types. Limited liability companies (LLCs) and S corporations are the most common selections, however they differ in numerous ways, most prominently are taxes and management structure. Occasionally, a business is capable of being both an LLC and an S corp. We will discuss the differences between each entity below.
What is an LLC?
A limited liability company (LLC) is a business structure which offers the projection of the personal assets of the business’s owners or commonly known as members. For instance, your business becomes enveloped in legal troubles or a debt collector is attempting to sue your business. In that case, only business’s assets can be lost and not the LLC members’ personal assets.
What is an S corp?
An S corporation or S corp, also known as an S subchapter, refers to a type of corporation that meets specific Internal Revenue Code requirements. The S corp is a structure that offers certain tax advantages over C corporations, or C corps, which make up the bulk of corporations. For example, an S corp—but not a C corp—may pass income (along with other credits, deductions, and losses) directly to shareholders, without having to pay federal corporate taxes.
Small business owners often choose to structure as an LLC because it offers more privilege than corporation structures do. But before you make this imperative decision, it’s understand the differences between LLCs and S corps. To learn more about the differences between establishing your business as an LLC versus an S corp, contact Nevada Small Business Consulting today! You can click the following link to view our 5-star Google Reviews. You can contact us today at (702) 587-5652 to schedule a no-cost consultation.