There are many similarities between an LLC and a S corporation.
In either case, there may be a small number of shareholders for the company or
corporation. However, there are also many differences, including the manner in
which a S corporation is taxed vs. the manner in which an LLC is taxed.
Both an LLC and a S corporation may have limited liability in
financial or legal issues. The amount of liability may vary depending upon the
jurisdiction, as well as the legal question at hand. In either case, the
individual owner, employee or shareholder cannot be held liable for the actions
of the company. However, individuals can be held responsible if the individual
acted alone using their position at the company in issues that involve
liability.
Taxes are a major difference between an LLC and an S
corporation. An S corporation is taxed only one time when the profits are
distributed to shareholders. The profits are not taxed at the company level,
and instead, taxes are paid by individuals on those profits as a form of
income.
LLCs are taxed very differently, depending on the jurisdiction
and can include double taxation on the profit when the company makes money and
again when that money is paid out to employees, owners or shareholders.
There are many similarities and differences with an LLC and an S
corporation. The manner in which individual owners wish to form their company
or corporation will depend on many factors, including the types of business,
number of owners and size of the company. In addition, issues of liability will
certainly be considered when a company is formed.
