If you're just starting a new business, or you've decided it's time to learn how to incorporate a business to protect your personal assets, you're probably a bit overwhelmed and unsure where to begin. Should you form an LLC or choose to structure your business as an S corporation, or S corp?
Both options offer a number of advantages and disadvantages and, as every state has its own guidelines, it's important to speak with your attorney or accountant before choosing a business entity. Still, here's a look at the difference between these two popular entities and examples of how each might be the best fit for you.
Understanding the Benefits
When you choose to form an LLC or S Corp, your personal assets will be protected from business creditors. This type of limited liability works by limiting your financial responsibility to the amount of your investment in your company. For example, if you put $20,000 into it and incur debts totaling $35,000, you will only be liable for the $20,000.
Both options offer a number of advantages and disadvantages and, as every state has its own guidelines, it's important to speak with your attorney or accountant before choosing a business entity. Still, here's a look at the difference between these two popular entities and examples of how each might be the best fit for you.
Understanding the Benefits
When you choose to form an LLC or S Corp, your personal assets will be protected from business creditors. This type of limited liability works by limiting your financial responsibility to the amount of your investment in your company. For example, if you put $20,000 into it and incur debts totaling $35,000, you will only be liable for the $20,000.