Does a S Corporation Give Me the Same Protection as a LLC?
December, 20, 2013
By: Barry E. Haimo, Esq.
There are several different types of business entities, with each having its own unique advantages and disadvantages. Business entities are designed in large part to limit the exposure to liability that owners/investors/shareholders may face. They all do a good job of protecting the owners from creditors of the business, or “inside creditors”. Read here to learn more about creditors. However, they are very different with respect to how they protect owners’ interests in the entities from their personal creditors, or “outside creditors.” You are significantly less protected from your personal creditors with a corporation electing to be treated as a small business corporation (S-corp). In other words, you are exposing yourself to unnecessary liability and you are at risk of having your business being taken away from you. The reason primarily has to do with reducing self-employment taxes, which was probably the main factor contemplated in the decision to elect to be treated as a s-corporation.
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