Florida | Business Law
Legal Question
What is the difference between an LLC and a "S" corporation?
What is the difference between an LLC and a "S" corporation?
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Read More Answered By: Edward J. Chandler |
What is the difference between an LLC and a "S" corporation? What is the difference between an LLC and a "S" corporation?
Both entities offer limited liability protection to the owners and pass-through taxation, however the LLC is more flexible in structure. In an "S" corporation, profits and losses pass-through to the stockholders in proportion to their ownership interest. If you own 50% of the stock you can be taxed at 50% of the profits or losses.
LLCs can be structured to divide income and tax liability however they wish, regardless of percentage of ownership. You may own 50% of the business, but elect to have only 20% of the profits reflected on your personal 1040, passing the additional income to an owner in a more favorable tax bracket. The possibilities are vast. Also, "S" corporations require all stockholders be US citizens and limit the number of stockholders to 75. There are no such restrictions with an LLC. |
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