An LLC is the most modern business formation; it is fairly new. An S Corp has been around for awhile. Both an S Corp and an LLC can choose to be taxed as a partnership, which is the lowest possible tax rate, or as a corporation, which has a slightly higher tax rate but allows you to do certain things such as compensate yourself as an employee. This has certain benefits depending on how you invest your money and how the business invests its money.
The LLC does not allow you to invest money even if you do compensate yourself as an employee. The LLC is easier for small business owners to make quick decisions and run the business. It is also a less complicated tax filing procedure. The S Corp does require corporate formalities such as annual meetings with minutes, and it requires corporate officers to sign off on many corporate resolutions to make them valid. Other than that they can operate fairly easily for any small business, and they can both elect to be taxed as a partnership to obtain the lowest possible tax rate. For most people, I would recommend the LLC or that you seek professional advice regarding your decision.
The attorneys at Mattleman, Weinroth & Miller, P.C., are experienced in business law in the state of New Jersey. To discuss the options for your business, please contact the office for your free initial consultation.