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What are the main differences between an LLC and an S-corporation?Although an S-corporation shares many of the same tax characteristics as an LLC, an LLC has more flexibility and less restrictions than an S-corporation. An S-corporation cannot have more than 100 stockholders, cannot issue more than one class of shares, and is subject to more formalities than an LLC (such as the requirement to hold an annual meeting of stockholders). However, owners of an LLC are required to pay social security and medicare taxes on the profits of an LLC. Stockholder of a corporation are not required to pay these taxes on profits over and above the stockholder's salary.
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