Corporation vs LLC
An LLC can distribute its income to each member equally, based on their capital contributions, or in many other ways. A corporation distributes its income to shareholders on a per share basis. An LLC can be a pass-through tax entity without the restrictions imposed on corporations.
Attorney Tom Olsen: Meredith, you're on news 96.5. Go ahead.
Meredith: I had a job come up. I went ahead and created a Subchapter S corporation because I needed to open up the bank account to receive payment. Someone said I should have done an LLC. Is it worthwhile switching over from Subchapter S to and LLC and why?
Attorney Tom Olsen: Well, the answer is probably no, Meredith. There is so little distinction between whether you're a corporation or LLC that I don't think it's going to make a difference to you. Meredith what's really going on just so you fully understand is that you have incorporated. You told the IRS that you want to be taxed as a Subchapter S corporation. You could have also opened up an LLC and told the IRS that you want to be taxed as Subchapter S. You're really a corporation with a Subchapter S status and that's a fine way for you to be doing business, Meredith.
Attorney Tom Olsen: Okay. Bye-bye. Good luck to you. Hey folks, my name is Tom Olsen. The name of the show is Olsen on Law. You're listening to news 96.5. We're going to take a break. We'll be back in just a few minutes.