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What is the difference in S-Corps and LLC?

In: Business & Finance, Business Law, Incorporation [Edit categories]

Answer:

An LLC is simply an entity (a separate entity, as is any corporation) that is set up by individuals in business to protect themselves from personal liability in the event of a lawsuit. The partners of the LLC (limited liability corporation) must always protect themselves personally by never "breaking the corporate veil", ie: not co-mingling corporate funds or expenses with their personal financial transactions. As far as taxes and the IRS, an LLC is treated as a pass-through corporate partnership. In other words, your earnings or losses from your LLC will pass-through from your corporate tax returns to your personal tax returns. You have to file a form 1065 each year which will include a form K-1 which states the earnings/losses for each member (partner) of the LLC. These amounts are then reported (passed-through) to that LLC members' personal tax return.

First answer by Rejoice01. Last edit by Rejoice01. Contributor trust: 0 [recommend contributor ]. Question popularity: 2 [recommend question].

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