Corporation vs. Limited Liability Company vs. Corporation (Corporation vs. LLC)
What are the advantages of a Corporation over an LLC? What are the disadvantages of an LLC over a Corporation?
An LLC (which elects to be taxed as a disregarded entity) does not have a tax benefit than an S-Corporation has. An S-Corporation allows that any profits other than salary are not subject to social security and medicare taxes (approximately 15%). All profits of an LLC are subject to FICA taxes up to taxable limits.
One strategy is to is to form an LLC, elect to have be taxed as a corporation, and then choose S corporation status.
For owners with salaries over $80,000 there is not much benefit since FICA taxes do not apply. Where an owner takes a smaller salary and larger profit, there would be sizeable difference.
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