Illinois is an unusual place. Yes, yes we all know that 4 of our last 9 governors ended up in prison, our credit rating and schools are in the toilet and the politicians only seem to know how to tax and spend and increase taxes and spend more…
But also in Illinois is also unique in the fact that an LLC costs more to register and maintain than an S-Corporation. Most others states this is the opposite. I have been discussing the advantages and disadvantages with a few people of late.
Personally I like the S-Corp because of the lower fees to start and maintain are lower than an LLC. But also at the moment the S-Corp profit is taxed only for income tax and not FICA taxes; an LLC’s profit is all subject to self employment taxes. I also personally believe that business owners should get some reward for the risk they are taking. So a tax saving benefit works nicely.
Both entities have limited liability. The biggest drawback of an S-Corp is the 25 % ownership of a passive entity. That is why rental properties are typically LLC’s.
The owners ship issues are also another major distinction between the two entities. An S-Corp cannot own another S-Corp, there can only be 100 owners and one share of stock. The LLC does not have these restrictions.
All things being equal I vote for an S-Corp.