Sole Proprietorship Llc Vs S Corp

Sole Proprietorship LLC Vs. S Corp

A Sole Proprietorship LLC is a business that is owned by a single person who has declared it to be a Limited Liability Company (LLC) but is filing taxes as a sole proprietor. An S Corp is an incorporated business that is filing taxes as an S Corp.

Sole Proprietorship

A sole proprietorship is a legal business structure for a single-owner business. This type of business files taxes on a Schedule C with their personal tax return.

Limited Liability Company (LLC)

An LLC is a business structure that is formed to limit the liability of the member(s) who own the business. The business can file taxes as a sole proprietor, partnership or corporation.

S Corporation

An S Corporation is a Corporation that becomes an S Corp solely for tax purposes. This passes along the business profit or loss to the shareholders who declare that on their tax return using a Schedule K1.

Registering Your Business

To become an LLC, you register your business with your state and file the LLC paperwork. To become an S Corp you incorporate first and file Form 2553 with the IRS.

Employee Identification Number

If you are the single owner of an LLC you are not required to get an Employee Identification Number (EIN), but you can. If you are an S Corp you will get an EIN when you incorporate.

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