What is the Difference Between an LLC and an S-Corp?

Although S Corporations and LLCs share similar characteristics – both provided limited liability protection to ownership and management, and both are taxed by the “pass through” system like partnerships –LLCs are more flexible and have fewer restrictions than S Corps.

The first major difference is that an S Corporation’s size and ownership composition are limited – there can be no more than 100 shareholders of an S Corp, there can only be one class of shares, and all the shareholders have to be individuals living in the United States. LLCs are not limited by kind or number of shareholders. Additionally, S Corporations have a number of required formalities that LLCs do not – including bylaws, holding regular director and shareholder meetings, and issuing stock. Lastly, management of an LLC can either be by outside managers or members where S Corps have a board of directors that elect officers.

For a free, confidential conversation to discuss this and other business law matters, including business formation legal services, contact Maryland business attorney Stephen J. Reichert at 410-299-4959, sreichert@reichertlegal.com or by clicking here.

Day, evening and weekend appointments are available in office or at your residence. Mr. Reichert personally serves business law clients throughout the entire state of Maryland.

Stephen looks forward to assisting you with your Maryland business law needs.

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