Differences & Benefits
Whether you’re just starting a business or thinking of changing your business structure, a common first step is comparing the LLC vs. the S corporation. While a limited liability company and an S corporation share some characteristics, they also have distinct differences. Get familiar with each before deciding which might be right for you.
LLCs and S corps have much in common:
Ownership. The IRS rules restrict S corporation ownership, but not that of limited liability companies. IRS restrictions include the following:
Ongoing formalities. Corporation laws have more mandatory requirements regarding how a corporation is to be managed than LLC laws. Therefore, S corporations face more extensive internal formalities. While LLCs are not required to, some advisers recommend that they too follow internal formalities.
Other differences between S corps and LLCs include:
As you decide which business structure is best for you, try our Incorporation Wizard to compare multiple business types by multiple key considerations.
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