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Kindly note that LLC (Limited Liability Company) and an S corporation are both corporate structures that, in the United States, allow pass-through taxation. The main differences between an S corp. and LLC are: Ownership And Size RequirementsA maximum of 100 shareholders are allowed to participate in the ownership of an S corporation, while any number of members may act as owners of an LLC. LLC's may add an additional layer of ownership, because corporations and other LLCs may act as members of an LLC.ManagementS corporations must adhere to a specific management structure. S corporations are required to name at least one person to serve on the company's board of directors. Officer positions, such as president, treasurer and secretary, must be appointed by an S corporation's board members. Shareholders of an S corporation do not participate in managing the company's daily affairs. LLC owners are allowed to manage the company, or choose non-members to oversee the company's day-to-day activities.Ongoing RequirementsAn S corporation must adhere to ongoing formalities, such as conducting company meetings and keeping strict records of the company's business activities. A record of shareholder and director voting must be maintained in the S corporation's ledger. Financial statements must be prepared and filed with the state where the S corporation operates. LLCs are not required to conduct company meetings or record details of company meetings.Raising MoneyAn LLC does not have the ability to raise money by issuing stock like an S corporation. S corporations are allowed to finance the company's expansion and pay its bills by offering stock to new shareholders. LLC's may have different classes of membership in the company that provides varying profit and voting privileges. S corporations are only allowed to issue one class of stock.
The following link very nicely compares the two. It is an excellent reference.http://www.diffen.com/difference/LLC_vs_S_Corporation
Having said this, LLPs do have some advantages over S Corp.
Liability ProtectionIn general partnerships, each participant is personally responsible for the actions of the company. This includes debts, liabilities and the wrongful acts of other partners. One advantage of a limited liability partnership is the liability protection it affords. This type of partnership structure protects individual partners “from personal liability for negligent acts of other partners or employees not under their direct control,” states the SBA. In addition, individual partners are not personally responsible for company debts or other obligations. This is advantageous for an individual partner when potential lawsuits or claims of negligence against the business are concerned.Tax AdvantagesIndividuals in a partnership are normally liable for filing personal income taxes, self-employment taxes and estimated taxes for themselves, according to the Internal Revenue Service. The partnership itself is not responsible for paying taxes. The credits and deductions of the company are passed through to partners to file on their individual tax returns. Credits and deductions are divided by the percentage of individual interest each partner has in the company. This can be beneficial for partners who have a limited interest in the company or special tax requirements due to their interests in other businesses.FlexibilityLimited liability partnerships offer participants flexibility in business ownership. Partners have the authority to decide how they will individually contribute to business operations. Managerial duties can be divided equally or separated based on the experience of each partner. In addition, partners who have a financial interest in the company can elect to not have any authority over business decisions but still maintain ownership rights based on their percentage interest in the company. Flexibility in business operations can become a disadvantage when partners make decisions based on personal interests and not the interest of the partnership as a whole.
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