What’s the difference between a Corporation, an “S Corp” and an LLC?

Basically, the main differences are:

• A Corporation and an S-Corporation are the same “entity” type with the same structure (Shareholders, Directors and Officers), the only difference is in how they are taxed by the Federal government. A Corporation is taxed once on it’s net profits (currently 21%) and again when those profits are given to the shareholder(s) as “dividends” – this is called “double taxation”.
• An S-Corporation (“S” means “Small”) has filed a form with the IRS (and some states require their own) that allows it to not be taxed on the profits; instead the profits (not including salaries) are added to the personal tax returns of the shareholder(s) and are taxed at the shareholder’s personal tax rate (instead of being double-taxed). The main restriction is that an S-Corporation shareholder(s) must be US citizens and a maximum of 100 shareholders.
• An LLC is a different entity type than a Corporation – it does not have Shareholders, Directors and Officers but instead has what are simply called Members (though they can choose “Managers” to manage the LLC as well as specify titles like “President”, etc.) which is another name for “owners”. Members can be either a real person or a business entity and there are no US Citizenship requirements.

For a more detailed comparison, see our guide: Which Business Entity to Choose