LLC vs S Corp: Which one should you choose?
- An LLC is a limited liability company, which is a type of legal entity that can be used when forming a business.
- An LLC offers a more formal business structure than a sole proprietorship or partnership.
- While LLCs and S corporations two terms are often discussed side-by-side, they actually refer to different aspects of a business.
- An LLC is a type of business entity, while an S corporation is a tax classification.
- An S corporation election lets the Internal Revenue Service (IRS) know that your business should be taxed as a partnership.
- To become an S-corporation, your business first must register as a C corporation or an LLC and meet specific guidelines by the Internal Revenue Service (IRS) in order to qualify.