what is the biggest difference and advantage between an s corp and a llc?

Question

I want to start a manufacturing business (me and my wife) and leaning towards the llc.but most companies that are llcs are real estate or holding companies.Am i wrong to go with llc?

Answer 1

Actually a LLC can make an election to be taxed as an S Corporation.

In an S Corporation everything must be distributed according to the shares outstanding. Also, all shares must be common shares. If anything (income allocation etc.) is not distributed according to S Corp shares outstanding, then you will lose the S Corporation status and be taxed as a regular C corporation (S and C refer to Internal Revenue Code sections).

In a partership, assuming the LLC elects to be treated as such (which is the default treatment), the partners can allocate income or losses or special wage allocations, however they want or agree upon from year to year. There are some rules to follow but generally that is allowed. Also, there are less formalities to make sure happen to stay legal such as shareholder meetings and actually issuing the stock.

LLC seems to be the entity of choice in my experience, especially since they can elect to be taxed as an S Corp when they first startup.

Answer 2

in Louisiana an s corp limits what creditors can go after should you go bankrupt. They can only go after business, not personal assets. I don't know about llc.