What is the difference between LLC and S Corp?
An S corp is a regular corporation, which has applied to the IRS to be treated as a “partnership” – meaning the corporation does not pay taxes on its income, instead the shareholders pay taxes on the income based on the % of the company that they own. This avoids the problem of double taxing corporate income (e.g, tax on company income, plus tax on the dividends when the profits are distributed). An LLC is a newer form of organizing a business, which functions the same way as an S corp for tax purposes, but you don’t need to apply to the IRS for “partnership” treatment, and you don’t need to meet certain requirements (for example, S corp can only have a certain number of shareholders). Basically, S corp and LLC are essentially the same for tax purposes. LLC’s provide greater flexibility if you plan to have several shareholders and if their shares will be different classes (preferred vs. common). As for other costs besides income tax, this varies by state – in terms of filing organizati
