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Resources for Starting and Running a Business

LLC vs. S Corporation

The Limited Liability Company (LLC) and the Subchapter S Corporation ("S Corp") share the benefit of pass-through taxation. This means that owners in the company report their share of profits and losses on each owner's individual tax return. The Internal Revenue Service (IRS) assesses no separate tax on the company itself. In contrast, "double taxation" occurs when the IRS taxes both a C Corporation's profit and dividends paid to shareholders.

Despite the similarity of pass-through taxation, an LLC can offer advantages over an S Corporation:

  • Not required to hold annual meetings or record meeting minutes (though we recommend it)
  • LLC owners need not worry about the formalities of issuing stock, since an LLC does not have stock
  • No limit to the number of owners
  • LLC owners need not be U.S. citizens or permanent residents

Form your LLC online in minutes or contact a Business Specialist at 800-818-6082 (toll-free) or 302-636-5440.