An LLC is a limited liability company, which is a type of legal entity that can be used when forming a business.

  • An LLC offers a more formal business structure than a sole proprietorship or partnership.

  • While LLCs and S corporations are two terms that are often discussed side by side, they actually refer to different aspects of a business.

  • An LLC is a type of business entity, while an S corporation is a tax classification.

  • An S corporation election lets the Internal Revenue Service (IRS) know that your business should be taxed as a partnership.

  • To become an S corporation, your business first must register as a C corporation or an LLC and meet specific guidelines set by the Internal Revenue Service (IRS) in order to qualify.