
LLC vs. S Corporations
The primary reason people choose S Corporations rather than Limited Liability Companies is to save money on employment taxes. If you organize your business as an S-corporation, you can classify some of your income as salary and some as a distribution. You'll still be liable for self-employment taxes on the salary portion of your income, but you'll just pay ordinary income tax on the distribution portion. Depending on how you divide your income, you could save a substantial a