Starting a business in Dallas is never an easy task. Not only do you need to find the right market, develop a strong business strategy and build a product or service that buyers will like, but you also need to make sure that you have all your legal affairs in order. This is why it’s important to choose the right business structure for your company.

There are many different types of business structures available to Dallas businesses, two of the most popular being an LLC (limited liability company) and an S corporation (also known as an S corp). These two types of businesses have some similarities but also marked differences. So which is right for your business?

In this article, we will discuss the differences between an LLC and an S corp and some of the considerations you need to make as you decide which business type is right for your company.

What Is an LLC?

A limited liability company (LLC for short) is a popular business structure for many small businesses throughout Dallas and the rest of the United States. In an LLC, the business owners are considered liable for any legal or financial liabilities that may arise. This includes any legal or financial issues that may result from any business activities or decisions.

However, since LLCs are “pass-through” entities, any profits and losses from the business are passed directly to the owners without incurring additional taxes. This means that business owners can save money on taxes compared to other business structures.

What Is an S Corp?

An S corporation (or S corp for short) is a type of business structure that allows for “pass-through taxation.” This is similar to an LLC but there are some distinct differences.

Unlike an LLC, an S corp has only one class of stock. This means that all profits or losses are passed directly to the owners without additional taxes. Additionally, owners of an S corp are not liable for any debts or obligations of the company, meaning that business owners are typically at less risk of being sued for any business-related activities or decisions.

LLC vs. S Corp: What’s the Difference?

When considering an LLC vs. an S corp, it’s important to understand both types of business structures and their differences. One of the most notable differences between LLCs and S corps is how they are taxed.

An LLC is a “pass-through” entity, meaning that all profits and losses are passed directly through to the owners without incurring additional taxes. An S corp, on the other hand, is taxed differently. The profits are passed through to the owners, but they must also pay taxes on their salaries, as well as the profits and losses of the company.

It’s also important to note that LLCs offer more flexibility when it comes to ownership. For example, an LLC can have any number of owners, while an S corp is limited to 100. Additionally, LLCs can have different classes of ownership, while S corps can only have one class.

Which Is Right for Your Business?

When deciding which is right for your business, it’s important to consider the goals of your company and the risks you are willing to take. An LLC is a great choice for businesses looking for flexibility and tax savings, while an S corp can be a better choice for business owners looking to minimize their personal liability and protect their assets.

If you’re still unsure which business structure is right for your company, it’s always a good idea to consult with a knowledgeable business attorney who is familiar with Dallas-based businesses. At UpCounsel, we have an extensive network of experienced attorneys who can provide you with the legal counsel and advice you need to make an educated decision on which business structure is right for your company.



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