Corporation

S Corp

LLC

Formation

Must draft and file articles of Incorporation with the Secretary of State.

Must draft and file articles of Incorporation with the Secretary of State.  Then file IRS form 2553 for S corporation status.

File Articles of Organization with the Secretary of State.

Ownership

Unlimited stock

Limited to 100 shares for domestic ownership.

Unlimited membership certificates.

Management

Officers, directors, and share holders.

Officers, directors, and share holders.

Managers / Members

Taxation

Taxed at the corporate level as well as the personal level.

Profits and losses “flow through” to the owner who reports them on his personal income taxes.

Profits and losses “flow through” to the owner who reports them on his personal income taxes. Or can opt to pay tax as a regular corporation.

Stock

Yes.  Unlimited stock and multiple classes of stock.

Yes. Limited to 75 domestic share holders and can only issue one class of stock.

Can sell membership certificates.

Limits personal liability

Yes.

Yes.

Yes.

Lifespan

Unlimited.

Unlimited.

Some state imposed limitations.

Can a non resident alien form entity?

Yes.

No.

Yes.

Corporate name protection

Yes.

Yes.

Yes.

Can be owned by other corporation or LLC

Yes.

No.

Yes.

Required to hold annual meetings and record annual minutes

Yes.

Yes.

No.

Raising funds

Able to sell shares of stock, go public, accept business loans and utilize corporate credit.

Able to sell shares of stock, go public, accept business loans or utilize corporate credit.  Although the S corporation is limited to 75 domestic share holders and can only issue one class of stock.

Can sell membership certificates to public, accept business loans, and utilize corporate credit.

Fringe benefits

Yes.   Fringe benefits are fully deductible for employees of the corporation.

Yes.  Restrictions apply.

Yes.  Restrictions apply.

Taxation

Profits are taxed.

Profits are taxed at the shareholder level.  The shareholders report profits and losses on their individual income tax returns.   The S corporation itself does not pay any tax. (Certain restrictions apply)

Members report profits on individual income tax return.  An LLC is taxed like an S corporation although it has the option of being taxed as a corporation.