An LLC is a type of limited liability company that protects its owners from personal liability for any debts or lawsuits related to the business. It also gives you the opportunity to form an entity separate from your personal assets.
But an S corporation offers more flexibility than an LLC
If you plan to start a business with employees, then you should consider forming an S corporation instead of an LLC. This will allow you to take advantage of tax benefits offered by the IRS.
Understand the differences between the two
There are several key differences between an LLC and an S corporation. First, an LLC is taxed as a separate entity, while an S corporation is treated as a partnership. Second, an LLC must pay taxes on its profits at regular intervals, while an S corporation pays taxes only when it has earnings. Third, an LLC can issue dividends to shareholders, while an S corporation cannot. Finally, an LLC can buy back shares from shareholders, while an S corp cannot.
Decide which one works best for your business
If you’re considering forming an LLC, there’s no need to rush into making a decision. You should consider what kind of business you plan to start before deciding whether to form an LLC or an S corporation. In addition, you’ll want to make sure that your state offers tax incentives for businesses with fewer than 100 employees.
