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Business Law – What Are The Differences And Benefits Between An LLC And An S-Corp?

  • A C-Corporation is the regular corporate filing, you pay taxes as a corporation and the corporate rate of taxes is higher than an individual; substantially higher.
  • The IRS allows businesses to own it and file as an S-Corporation which is used for smaller businesses.
  • There are certain types of requirements in order to make one eligible as an S-Corporation, which has to do with the number of shareholders, the amount of revenue generated, and type of stock that is issued.
  • In those situations if you’re eligible you pay taxes in a S-Corporation rate which is lower than C-Corporation rate, it is probably a little bit higher than an individual rate, however, the cumbersome requirements of the corporate entity are still the same.
  • You still require filing quarterly returns, you still have to pay annual corporate taxes, annual franchise taxes and none of those things are associated with an LLC.
  • In this day and age, I think an LLC is even better than a S-Corporation because the individual is taxed at an individual rate with an LLC, not even as high as S-Corporate rate and they don’t have any of the exposure of personal assets that the corporations (S or C-Corporation) offer you. You get the benefits of all the corporate ownership but paying taxes at an individual rate even lower than an S-Corporation.

This short informational business law video was provided by Arnold Drucker, an experienced Jackson Heights Business Lawyer.