Choosing the Right Business Entity
Whether you are just starting a new venture or growing your business beyond a sole proprietorship, you must decide which business entity suits your needs. In the world of small business, there are two clear choices: a limited liability company (LLC) or an S-corporation (often shortened to s-corp).
Both LLCs and s-corps do what a sole proprietorship does not, and that is remove your personal assets from the reach of your business creditors. Additionally, both entities treat business income as your personal income for tax purposes.
Differences between LLCs and S-Corps
Despite the similarities, there are several key differences between LLCs and s-corps.
If your business has several owners, an LLC allows you to distribute income however you wish. For example, a two-member LLC can distribute income in a 70-30 split in cases where...