The difference between a sub s corp and an LLC

Both a sub-chapter S corporation and an LLC will protect to from personal liability if your business hurts someone.  Also, there are some tax advantages to being a sub s corporation.  The main difference is that an LLC allows you to be taxed as a sole proprietor, partnership or a sub s corporation.

Attorney Tom Olsen: A text from somebody asking what the difference between an LLC and a Subchapter S Corporation. I started that but let's go ahead and finish it and that is this that both of them are very similar. People are using LLC's or corporation to protect themselves from personal liability. If you have a business, that you're worried about that business might hurt somebody, one of your employees is driving around or a piece of equipment. Then you want to be incorporated or an LLC so that business hurts somebody, that person would be obligated to sue your business, would not be able to sue you personally.

Some people also do that for the rental property. I'm not necessarily a big believer in doing it for just some rental property but some people do. Then the people-- The other thing is that if you have a business, there are some tax advantages that being a Subchapter S Corporation or an LLC. People learn what's the difference? Well, there's not much difference other than this, if your corporation, really, there's only one way you're going to be taxed and that's a Subchapter S Corporation.

If you're an LLC, you have the option to being taxed in any way that you want to. Whether it's a sole proprietorship, whether it's a partnership, whether it's a Subchapter S, all those options are available too with an LLC. If you have a corporation, you're locked into doing a Subchapter S which is a good thing in any case, but if you want to know the real difference is you'd want to talk to your accountant or CPA and ask him or her, "Hey, I know I need to do one of these, which would be better for me as a Subchapter S Corporation or an LLC," and get that tax advice on it.

Chrissy: Depending upon the kind of business and the various important things, your accountant will give you the right entity for you.

Attorney Tom Olsen: Everybody thanks so much for your great calls and questions. We do so much appreciate if we make a suggestion for you, go outdoors and take pleasure in a beautiful nature and as always, enjoy your friends and family. My name is Tom Olsen, the name of the show is Olsen on Law. You're listening to news 96.5.