How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Rakhi Vasavada Your Own Question
Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4452
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
Type Your Finance Question Here...
Rakhi Vasavada is online now
A new question is answered every 9 seconds

What is the difference between S Corp and LLP? What advantages

This answer was rated:

What is the difference between S Corp and LLP? What advantages does an LLP have over S Corp??

rakhivasavada :

Dear Friend, Hello and Welcome.

rakhivasavada :

Thank you for using Just Answer. Kindly remain online for a while as I prepare your reply

rakhivasavada :

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 Requirements

A 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.


S 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 Requirements

An 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 Money

An 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.

rakhivasavada :

The following link very nicely compares the two. It is an excellent reference.

rakhivasavada :

Having said this, LLPs do have some advantages over S Corp.

rakhivasavada :

Liability Protection

In 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 Advantages

Individuals 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.


Limited 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.

rakhivasavada :

I am sure this would help.

You may please leave a positive rating if this helps as that is the only way we receive credit for assisting you. Alternatively feel absolutely free to revert with more queries if you have.

Warm Regards

Rakhi Vasavada and 2 other Finance Specialists are ready to help you

Related Finance Questions