Which is Better: LLC or S-Corp?

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Which is Better LLC or S-Corp?
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Which is Better LLC or S-Corp?

• Running a business needs a lot of things to be
  considered as a whole. However, legal structure
  and tax category that a company falls under is an
  important part of setting up business. Its a
  crucial decision which will impact your bottom
  line and profit-sharing method. What is right for
  one company may or may not be correct for the
  other. There are 5 basic legal structures Sole
  Proprietorship, Partnership, S-Corporation
  (S-Corp), C-Corporation (C-Corp) and Limited
  Liability Company (LLC). Sole Proprietorship,
  Partnership and S-Corp are called pass-through
  entities since the taxable income of the company
  passes through owners tax return.

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Which is Better LLC or S-Corp?

• An LLC (Limited Liability Company) is a legal
  structure of the business whereas an S-Corp is a
  tax category. LLC is one of the most prominently
  used entity type by people all around the world.
  An LLC can choose to file their taxes as an
  S-Corp or C-Corp, if it qualifies. The advantage
  of an LLC is that it protects its members assets
  from company liabilities or debts. An LLC is a
  separate entity from its owner. By default, LLCs
  are taxed as sole proprietorship or general
  partnership. That means when the profit passes
  through the owners, its taxed at owners tax
  rate plus an additional Self-Employment tax is
  also levied. They need to opt to file as an
  S-corp or C-corp. The owners

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Which is Better LLC or S-Corp?

• An S-Corporation (S-Corp) is a US-based
  corporation body that holds some special
  facilities for tax benefits. The total tax
  calculation is passed directly to the
  shareholders of the corporate company. The
  company will file a return, but the taxable
  income is passed to the owners through a
  K1-Form.The taxes are paid at the shareholders
  income tax rate.
• S-Corp can be any individual (holding a US
  citizenship), certain trust or estate or certain
  tax-exempt organizations. Aside from tax purpose,
  the other features of an S-Corp are similar to
  that of a C-Corp. It offers similar liability
  protection, have board of directors, follow
  certain internal practices, conducts shareholder
  meetings like a C-Corp. S-Corp is an appropriate
  choice for small and medium size private
  companies.

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Conclusion -

• The big question is, if an LLC can choose to file
  as a C-corp or an S-corp then why remain as an
  LLC? LLC gives a better liability protection than
  a Sole Proprietorship or Partnership. And when
  compared to C-corp or S-corp, the complexity of
  setting up the business and regulations to follow
  are much lesser and not stringent. Also, it gives
  a flexibility of changing the tax structure at a
  future date. So, contact your CPA today to decide
  whats the correct legal and tax option for your
  company.

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