© Copyright Acquisition International 2024 - All Rights Reserved.

Article Image - LLC vs S-Corp: What’s the Difference and Which Will Help Your Business Grow Faster?
Posted 9th December 2022

LLC vs S-Corp: What’s the Difference and Which Will Help Your Business Grow Faster?

When forming a business, the number of pivotal decisions you need to make is eye-watering. And yet if you choose correctly at this stage, it’ll be a much smoother ride to success. Picking a structure for your fledgling company is particularly important, with the main sticking point being whether you form an LLC or an S-Corp.

Mouse Scroll AnimationScroll to keep reading

Let us help promote your business to a wider following.

LLC vs S-Corp: What’s the Difference and Which Will Help Your Business Grow Faster?

When forming a business, the number of pivotal decisions you need to make is eye-watering. And yet if you choose correctly at this stage, it’ll be a much smoother ride to success.

Picking a structure for your fledgling company is particularly important, with the main sticking point being whether you form an LLC or an S-Corp.

If you’re new to these concepts and you don’t know which is right, read on as we dismantle and demystify each in turn.

LLCs explained

Limited liability companies are legal entities created by entrepreneurs who want to build businesses without leaving their personal assets hanging in the balance.

For instance, with an LLC you won’t be beholden to any debts that the organization accrues. You’ll also be able to report income and losses made by an LLC as part of your tax return, rather than having to file separately for the business.

LLCs can be owned by an individual, or by a partnership of several people, in which case the aforementioned pass-through taxation process would still apply.

How to form an LLC, e.g. in Florida

There are a few things you need to do to form an LLC in Florida, and you can either choose to handle this yourself or make use of an LLC formation service to take care of all the complex admin instead.

Every newly launched business needs a name, a registered agent, articles of organization, an operating agreement, and an employer identification number.

S-Corps considered

From a liability perspective, S-corporations are identical to LLCs, which gives founders a means of innovating without taking too many risks with their personal financial situation.

When it comes to taxation, S-corps make their income and losses taxable through the people who own shares in the organization. IRS rules on what qualifies as an S-corp are stringent, and the main requisite is that a maximum of 100 shareholders are allowable.

Another important factor for those who want to turn their business into an S-corp is that it has to be registered as an LLC or a C-corp beforehand.

In fact, a business can be both an LLC and an S-corp simultaneously, because these are not mutually exclusive states.

Which one is right for you?

Speaking generally, LLCs are subject to fewer rules and restrictions regarding things like ownership structures and operational requirements than full-blown corporations, whether of the S or C variety.

For example, there’s no cap on how many owners can hold a slice of an LLC, while the 100 shareholder cap on an S-corp is just the start of the obligations and standards to which this type of business must adhere.

Having things like a board of directors, and scheduling shareholder meetings, as well as issuing stock and creating corporate bylaws, will all be a necessity if you go the S-corp route.

For entrepreneurs who are just getting started with a new business project, setting up an LLC is the obvious choice. If it makes sense to move it to an S-corp further down the line in order to optimize your taxation situation, then that’s perfectly possible without needing to also incur any additional liabilities as an individual.

What about growth?

The growth of a business is not just contingent on its structure, and you don’t need to get too bogged down in deciding between LLC and S-corp status early on.

When you eventually do get to the stage that your company is enjoying sustained growth, getting experts in taxation and legal matters involved to advise on and oversee any structural transition is wise.

Categories: Legal, News


You Might Also Like
Read Full PostRead - Eye Icon
Deal of the Month
Innovation
01/07/2016Deal of the Month

Next Group is a highly innovative technology company, providing unique telecommunications platforms that are both elegant and efficient.

Read Full PostRead - Eye Icon
Everything You Wanted To Know About Becoming An LLC
Legal
29/07/2022Everything You Wanted To Know About Becoming An LLC

In the 90s, limited liability companies (LLCs) rose in popularity as the newest business entity structure available in the United States. Budding companies enjoyed the liability protection provided by this formation style because it keeps personal assets separ

Read Full PostRead - Eye Icon
Intelligent Information Management
Innovation
21/07/2022Intelligent Information Management

M-Files provides a modern approach to information management that enables a smarter way to work. It connects people with the content that they need, when they need it, regardless of where it is stored, to increase the productivity of knowledge workers, ensure

Read Full PostRead - Eye Icon
9 Benefits of Starting a Business Abroad
Innovation
28/04/20209 Benefits of Starting a Business Abroad

Most businesses strive for growth. This growth means different things to different organizations. However, some include taking the next step to global distribution. There are a few opportunities available for businesses looking to start a business abroad or ex

Read Full PostRead - Eye Icon
What Are the Key Features of a Debit Card?
Finance
01/08/2023What Are the Key Features of a Debit Card?

When contemplating the question, "how old do you have to be to have a debit card?" one might also ponder the various features accompanying this financial tool. Debit cards, a ubiquitous component of modern personal finance, come with several characteristics th

Read Full PostRead - Eye Icon
Ones to Watch for 2016: The Best Boutique Law Firms
Legal
01/07/2016Ones to Watch for 2016: The Best Boutique Law Firms

Enyo Law LLP is a law firm that acts exclusively in complex and high-value disputes whether litigation or arbitration.

Read Full PostRead - Eye Icon
Pandora to Acquire Key Assets from Rdio
Innovation
17/11/2015Pandora to Acquire Key Assets from Rdio

Adding technology, IP and talent to accelerate development of new capabilities.

Read Full PostRead - Eye Icon
Payday Loans vs. Personal Loans: Seven Differences
Finance
16/11/2021Payday Loans vs. Personal Loans: Seven Differences

Payday loans or personal loans could be your place of refuge when you get into an emergency need. They are an excellent way since the application and disbursal don't take long.

Read Full PostRead - Eye Icon
Coronavirus Crisis Fuels Strong Performance of Technology Sectors but Growth Should Accelerate Post Lockdown
Innovation
16/07/2020Coronavirus Crisis Fuels Strong Performance of Technology Sectors but Growth Should Accelerate Post Lockdown

The huge increase in expenditure on products and services from innovative technology sectors during the Coronavirus crisis could rise dramatically as restrictions lift and societies and economies begin to return to some form of normality. This is because busin



Our Trusted Brands

Acquisition International is a flagship brand of AI Global Media. AI Global Media is a B2B enterprise and are committed to creating engaging content allowing businesses to market their services to a larger global audience. We have 14 unique brands, each of which serves a specific industry or region. Each brand covers the latest news in its sector and publishes a digital magazine and newsletter which is read by a global audience.

Arrow