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1. LLCs Vs. S Corporations

2. ENTITY COMPARISON TABLE

LLCs Vs. S Corporations

S Corporation LLC
No more than 75. All shareholders
Number of No maximum limit. In some states
must consent to the election at the time
Owners at least 2 members are required.
it is made
Individuals, US citizens or permanent
All S Corporation eligible owners,
residents. decedent's estates,
Nature of the plus, non-residents, corporations,
bankruptcy estates, certain trusts,
Owners limited or general partnerships,
charitable organizations and certain
most trusts, and pension plans.
qualified plan trusts.
Can be managed either by the
Nature of Managed by board of directors and owners (Member-Managed) or by
Management officers one ore more Managers (Manager-
Managed).
Nature of Different classes and priorities of
Single class of stock
Ownership ownership are allowed.
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ENTITY COMPARISON TABLE

Here is a comparison table among different types of business structures. Please notice
that only LLCs and Corporations are chartered entities.
S Corporations are not a special business entity. They are general corporation that have
adopted an special tax treatment.
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Characteristics General
LLC S Corp Corporation
Formation Partnership
Duration Agreement of
File with
Liability parties involved. File with state for File with state for
state for
Simplicity of No permission permission permission
permission
Operation required
Management Dissolved by Typically limited to
death of partner a fixed amount of Perpetual Perpetual
Taxation
or bankruptcy time
Pass Through
Shareholders
Income/Loss
Shareholders are are typically
Double Members not
typically not not
Taxation Partners have typically liable for
personally liable personably
Cost of unlimited liability the debts of the
for the debts of theliable for the
Creation LLC
corporation debts of the
Raising Capital corporation
Formality of
board of
Formality of board
Some formal directors,
Relatively few of directors,
requirements but officers,
legal officers, annual
less formal than annual
requirements meetings and
corporations meetings and
annual reporting
annual
reporting
The
corporation is
Typically each Members have The corporation is
managed by
partner has an operating managed by the
the board of
equal voice unless agreement that board of directors
directors who
otherwise outlines who are elected by
are elected by
arranged management the shareholders
the
shareholders
Each partner pays If properly
tax on his/her structured there is
No tax at entity
share of the no tax at the entity Corporation
level. Income / loss
income and can level. Income/loss is a taxable
Transferability is passed through to
deduct losses is passed through to entity.
of Interest the shareholders
against other members of the
sources of income LLC
No, corporate
losses can't
Yes Yes Yes be deducted
by
shareholder
No No No Yes
Filing fee with the Filing fee with the Filing fee
None
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Source: http://www.activefilings.com