An S corp LLC is not a specific business structure. Rather, an S corporation (S corp) and a limited liability company (LLC) are two different types of business structures in the United States. Here are some key differences between the two:
Limited Liability Company (LLC)
- A business structure that provides limited liability to its owners in many jurisdictions.
- LLCs are not corporations under state law; they are a legal form of a company that provides limited liability to its owners in many jurisdictions.
- LLCs can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.
- LLCs are well known for the flexibility that they provide to business owners.
- An LLC with either single or multiple members may elect to be taxed as a corporation through the filing of IRS Form 8832. After electing corporate tax status, an LLC may further elect to be treated as a regular C corporation or as an S corporation.
S Corporation (S Corp)
- A type of business structure that is typically more appropriate for small and medium-sized businesses that want to avoid the double taxation that can occur with a traditional corporation.
- S corps are a popular choice for businesses that want the liability protection of a corporation but prefer to be taxed like a partnership or sole proprietorship.
- To be eligible for S corp status, a business must meet certain requirements, such as having no more than 100 shareholders and being organized as a domestic corporation.
- S corps are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.
- An LLC can attain S corp status if it meets certain criteria.
Ultimately, the choice of whether to organize as an S corporation or an LLC depends on the specific needs and goals of the business owners.
