January 07, 2008

S-Corp vs. LLC

Would someone please tell me the difference between a LLC and S-Corp? Info: single individual media, consulting and may add someone to board of directors for new longterm project.
Thank you
James

Tagged:

llc,
scorp

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January 08, 2008

Posted by TonyLiu

4 stars ( 1 rating )

There is a wealth of information available by simply googling for your question. I'll sum it up for you in a couple lines.

If you expect to have multiple investors in your business or to raise money from the public. While an LLC works fine when you have just a few investors, especially those who will be active in the day-to-day operations of the business, it may get more awkward when the number of investors increases.

For example, you'll likely run into resistance from potential investors if you can't offer them the corporate stock certificates that they consider tangible evidence of their partial ownership of the business. Rather than wasting your time trying to overcome this resistance, it's probably better to structure your business as a corporation.

Comments

stevelup: While S Corps and LLCs are both "pass-thru entities" for tax purposes, the LLC is a little more flexible in the early years. The benefit of a pass-thru entity is that there is no corporate level tax. Instead all of the income or loss is passed to the shareholders.

S corps are limited to 100 shareholders and one class of stock; LLCs have fewer limitations and are more flexible in the allocation of income or deductions. Neither one will be acceptable to a VC Firm or Investment Bank.

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S-Corp vs. LLC

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