S-Corp Vs LLC

UPDATED: Sep 30, 2022

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S-Corp Vs LLC


I am about to begin my career as a insurance broker and I would like to know if
setting up an S-corp or LLC would be more beneficial to me for tax purposes?

Asked on August 3, 2017 under Business Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

S-corps and LLCs (which select, when being formed, what is variously known as "pass through," "disregarded," or "partnership" tax treatment) are treated exactly the same for tax purposes: in both cases, there is no "double taxation." Profits are not taxed first at the entity level, then taxed again when distributed to the owners; rather, the profits and losses (which can provide tax deductions) pass through the S-corp. or the LLC directly to the owner(s) and are taxed only with his/her/their income.
So tax-wise, there is no difference. There is also no difference in liability protection. An LLC involves a little less reporting and paperwork; an S-corp. is slightly easier to sell shares to other people later (e.g. if you want to take on partners)--that's about the only difference. Either one will work fine for you.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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