S Corp Versus LLC

By Jason Watson, CPA
Posted February 22, 2020

The next pay per view! UFC #58,723, The Apology… S Corp Versus LLC!!

Since this book is about LLCs and S Corps and we’ve already discussed a ton of stuff, we put together a small table to illustrate the S Corp vs LLC contrasts and comparisons; sounds like the start of a college essay. Yuck. Here we go-

Quiz time! What’s the difference between an LLC and an S Corp? None, except the avoidance of self-employment taxes and the tax return form number. That’s it! Ok, perhaps that is not entirely true. There are two additional burdens when exploring the LLC vs S Corp comparison.

One is tax return preparation, and subsequent fee. A Form 1120S is a business entity tax return and WCG’s fee is typically $800 to $1,200. The second burden is payroll processing; as an S corporation you must pay the shareholders a reasonable salary as employees. This too adds a financial burden as well as a series of administrative “touches.” But! As you will see, the savings can be significant. For a small increase in chores, you could easily save thousands of dollars. Yes, plural.

Jason Watson, CPA, is the Managing Partner of WCG, Inc., a progressive Colorado Springs tax and consultation firm.

Taxpayer’s Comprehensive Guide to LLCs and S Corps : 2020 Edition
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Taxpayer’s Comprehensive Guide to LLCs and S Corps