© 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
Kosmos Energy Makes Significant Gas Discovery Offshore Mauritania
Strategy
27/04/2015Kosmos Energy Makes Significant Gas Discovery Offshore Mauritania

Kosmos Energy announced today that the Tortue-1 exploration well, drilled to test the Tortue West prospect, which forms part of the Greater Tortue Complex, in Block C-8 offshore Mauritania has made a significant, play-opening gas discovery.

Read Full PostRead - Eye Icon
How the Internet has Transformed Customer Service
Corporate Social Responsibility
24/02/2023How the Internet has Transformed Customer Service

The internet, in the past two decades, has transformed many aspects of life over the years, and some would even say practically all aspects. One area that has been forever changed is customer service as companies are now able to utilize the internet to provide

Read Full PostRead - Eye Icon
American Express Survey Reveals UK Businesses Are Maintaining a Prudent Approach to Business Growth
Finance
02/03/2015American Express Survey Reveals UK Businesses Are Maintaining a Prudent Approach to Business Growth

Caution typified by the recession era still prevails, says American Express

Read Full PostRead - Eye Icon
The Power of Outsourcing
Finance
02/02/2016The Power of Outsourcing

Most businesses we speak to are suffering from the same condition. Lack of time. To build and grow your business you need to be able to focus on identifying growth areas, building a strong pipeline of prospects and maintaining/retaining your existing customer

Read Full PostRead - Eye Icon
Warburg-HIH Invest Acquires Landmark Property in Warsaw
Finance
08/04/2016Warburg-HIH Invest Acquires Landmark Property in Warsaw

Warburg-HIH Invest Real Estate GmbH (Warburg-HIH Invest) has acquired the office property Prime Corporate Center in the city centre of Warsaw.

Read Full PostRead - Eye Icon
Treasured Island
Finance
29/09/2016Treasured Island

Baker Tilly Isle of Man are a part of Baker Tilly International which is the 7th largest advisory company, and are a leading firm of chartered accountants and business consultants.

Read Full PostRead - Eye Icon
Years of Experience
Innovation
23/11/2018Years of Experience

Based in Monaco, Antonio Bertelli founded AGAP International SARL with a goal of becoming the worldwide seafood trading company, working with all the major fish producers in order to give customers an excellent service. We invited Antonio Bertelli to talk to u

Read Full PostRead - Eye Icon
Are You Ready for ESOS?
Legal
17/04/2015Are You Ready for ESOS?

Nearly three quarters of businesses (73%) have not started their mandatory energy audits to comply with the new ESOS legislation by the deadline of 5 December 2015.

Read Full PostRead - Eye Icon
New Merger & Acquisition Guidance Aims to Minimise Climate Risk From Sales of Oil, Gas Assets
M&A
17/02/2023New Merger & Acquisition Guidance Aims to Minimise Climate Risk From Sales of Oil, Gas Assets

The energy sector is, for obvious reasons, the key area of concern for climate change. Can new guidelines for M&A prioritise emissions reductions?



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