{"id":2734,"date":"2023-12-08T20:31:57","date_gmt":"2023-12-08T20:31:57","guid":{"rendered":"https:\/\/www.businessrocket.com\/business-corner\/?p=2734"},"modified":"2024-02-22T15:16:18","modified_gmt":"2024-02-22T15:16:18","slug":"what-is-the-difference-between-an-llc-and-a-s-corp","status":"publish","type":"post","link":"https:\/\/www.businessrocket.com\/business-corner\/start\/llc\/what-is-the-difference-between-an-llc-and-a-s-corp\/","title":{"rendered":"What is the difference between an LLC and A S-Corp? Understand the real difference\u200b"},"content":{"rendered":"\t\t
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\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"What\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t
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What is the difference between an LLC and A S-Corp? <\/h1>\t\t\t\t<\/div>\n\t\t\t\t
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We understand that choosing a business structure is an important step for someone starting their own business. With the vast amount of knowledge on the internet, it’s easy to get confused among all the technical terms. This post aims to simplify all of them and make it easy for you to make an informed decision about your business.\u00a0<\/span><\/p>

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We have called upon over 10,000 business owners for advice on this, and we would like to share their insights in a simple way to make them understandable and useful for future business owners.\u00a0<\/span><\/p>

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Let’s start with the term LLC. It stands for limited liability company as opposed to the commonly believed “limited liability corporation.” For the sake of this Article, we will assume the LLC is being taxed on a pass-through basis, not as an S-Corporation or C-Corporation. The LLC was created to be a simplified business structure in comparison to the corporation. However, it’s noted that this simplification has some downsides, and it is especially important for small businesses to understand its application.\u00a0<\/span><\/p>

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Figuring out what position the company’s owners will hold within the business will make it easier for you to decide which structure is best. The question is if they are going to be hands-on in the daily operations or passive in the work decisions.\u00a0<\/span><\/p>

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What is a Hands-On Owner?<\/span><\/b><\/h2>

This refers to an owner who participates in the day-to-day working of their own business. An example would be if you start a clothing company, then what would be the owner’s role in the work? Will they design clothing, track down suppliers, find distributors, communicate with sponsors, and build a website, among other tasks? If this is the case for you, then you are a hands-on owner.<\/span><\/p>

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What Is A Passive Owner?<\/span><\/b><\/h2>

This owner doesn’t work for their company. They prefer to wait for results after making an investment in the business. One of the most common examples is a real estate owner. They rent out a property after purchasing it, effectively letting go of their daily operations in real estate. They just focus on collecting the rent and letting the renters be on their own.\u00a0<\/span><\/p>

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What is the Best Structure for You?<\/span><\/b><\/p>