South Carolina is a great state for entrepreneurs wanting to be their own bosses. But, before you start a new company, you’ll need to choose the right business structure. With so many business structures available, it’s easy for things to get confusing. To help you out, here’s a closer look at the differences between a limited liability company (LLC) and an S corporation.
Ease of setting up
It’s understandable to feel eager about the business formation in your future. Considering that, you might be looking out for a business structure that’s easy to start. If that’s the case, LLCs might gain the upper hand. An LLC doesn’t follow as many regulatory requirements as an S corporation.
If you want a break during tax time, it’s good to know that the IRS taxes LLC income as personal income. This means that your business doesn’t pay taxes at a business and personal level. With that said, choosing the S corporation business structure also has tax-related advantages. In most cases, this type of corporation won’t have to pay corporate-level federal taxes.
No matter what business structure you choose, most companies cost money to set up. If you’re looking for a cheaper option, an LLC should cost about $500. Setting up an S corporation is typically more expensive, costing about $1,000. Regardless of which option you choose, the exact fees you’ll pay vary by state.
To summarize, S corporations and LLCs have distinct advantages and disadvantages. Creating a corporation can give your company more credibility. However, forming an LLC can mean waiting less time and paying fewer expenses to get your business off the ground.