Business owners–and even attorneys and accountants–can get twisted up in the debate over which is best, the LLC or the S corporation. But it’s not necessarily an either/or proposition. Rather, you can set up an LLC first, and later elect to have the LLC treated as an S corporation. If your LLC operates an active trade or business, and payroll taxes (SECA taxes) on the owner or owners are high, you may find that an S corporation election is the best choice.
Both organizational forms share the characteristic of “passing-through” their income to the owner(s). Both also provide their owner(s) limited liability protection. But each has some distinguishing features, too. You, as a new business owner, will want to consider the differences as you choose the form for your enterprise.
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