When starting a new business, one of the first structural decisions is whether to form a Limited Liability Company (LLC) or elect to have your company taxed as an S corporation.

When starting a new business, one of the first structural decisions is whether to form a Limited Liability Company (LLC) or elect to have your company taxed as an S corporation. An LLC is often favored for its simplicity, flexibility, and relatively light administrative requirements, while still providing liability protection for the owners. An S corporation is not a different type of entity but rather a tax election available to qualifying businesses, and it may provide certain tax advantages by allowing owners to split income between salary and distributions, potentially reducing self-employment taxes. However, S corporations come with stricter requirements, including payroll obligations and limitations on ownership. The best choice depends on factors such as expected income, administrative tolerance, and long-term business goals, making it wise to consult with both legal and tax professionals before deciding which structure best supports your new venture.

If you’re thinking about starting a new business and have questions about LLCs and S corporations, give us a call at 253.858.5434 to see how we can be of service.