LLC Vs S Corporations

The LLC vs S Corp argument that you will hear the most is about taxes. This argument is so often heard because most business owners are concerned about how much they will have to pay in taxes. Nobody wants to pay a lot in taxes. The LLC vs S Corporation argument shows how sometimes choosing to form an LLC with the Corp taxation is the best route to go, rather than choosing one or the other. The LLC is not a federally recognized business entity for tax purposes, so you have to choose another business entity to file your income taxes. Choosing the S Corporation for tax purposes allows you to benefit from the pass through taxation, but allows you the simplicity of forming and running an LLC. If you elect to form an LLC but be taxed as an S Corp, you need to file the IRS Form 2553 and have it filed with the IRS before the 16th day of the third month of the current tax year.

With both an LLC and an S Corporation, you will be able to benefit from pass-through taxation. Any profit or loss that your business has will be passed onto your personal income taxes, with both the LLC and an S Corporation. This is where the S corporation differs from regular corporations, with a regular corporation there is the issue of double taxation. With both an LLC and an S Corporation having, the same tax advantages many people elect to form an LLC that is classified as an corporation for tax purposes because it's easier to setup and maintain.

For more information on the topic of LLC vs S Corporations please visit our website. We specialize in educating entrepreneurs on the topic of entity formations.

Article Source: http://EzineArticles.com/?expert=Michael_Barnson