LLC, or a limited liability company, is a type of business whereby the owner is exempt from liability. On the other hand, S-corporation is a law that defines how a business is taxed. S-corporation can also be called S subchapter. According to the S subchapter, a company can be classified as an s-corporation if it has only one class of stock, the firm is based and operates in the United States, and the firm has more than one shareholder. However, the shareholders have to be less 100. Some states recognize the existence of an s-corporation while others don’t.
The main advantage of S-corporation and LLC is that they both have limited liability. That means that the directors cannot be held liable for the firm’s debts. Another advantage is that both corporations are only taxed once. The main difference that exists between LLC and S-corporation is that the latter has more stringent guidelines. For example, the directors of S-corps must be residents of the United States. The main disadvantage of LLC’s is that business and personal affairs have to be separated. If a director uses company money for personal expenses, he or she exposes the business to legal problems—it can be a worthy reason for creditors to pierce the corporate veil.
If you are in the market for business funding, you can borrow from family and friends, apply for a personal loan, seek investors, sell company shares or apply for a federal business loan.