Technically speaking, a Subchapter S corporation is not a type of business structure—a corporation is. A subchapter S corporation is really a tax election, a way of treating (for tax purposes) a corporation that meets certain requirements. A “corporation” is a legal entity, duly established under state laws, which has the ability and legal authority to act as a single entity. To qualify as an S corporation, a company must:
A corporation must also affirmatively elect to be treated as an S corporation. It will not automatically qualify as one by meeting the above criteria.
The benefits conferred by subchapter S status include:
Similar to a corporation, an LLC is a legal entity, separate from its owners (called “members”), capable of acting on its own. Limited liability companies are typically established under state law, and the qualifications vary from state to state. Like an S corporation, the income from an LLC passes through to members—there is no entity-level income tax. An LLC also offers the same protection of personal assets and new worth provided by a corporation.
Some of the advantages of an LLC include:
At the office of Howard N. Sobel, we provide comprehensive counsel to businesses and business owners throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to see if you qualify for a free initial consultation (on selected cases). Evening and weekend appointments can be arranged upon request. We accept all major credit cards.
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