There can be a lot of questions when you are trying to determine the differences between an LLC and an S-Corp. Each one has its benefits, but you will want to make sure to find what works best for your business. Make sure to review your options, and it will make the process of starting your business run smoother.
How to Secure the Tax ID Number for Your Business
When you are trying to get your business off the ground, there are several options for an EIN number. The EIN acts as a social security number for your business, as the government uses it to identify a business. With the EIN, the business owner is fully responsible to make all payments.
If you are not eligible for a Social Security Number, you can use an Individual Taxpayer Identification Number. Residents and non-residents of the United States filing a tax return are eligible to get this number.
Tax Differences Between the LLC and an S-Corp
The LLC Tax ID Number is paid on the individual owner’s tax return based on the percentage of ownership in the company. The individual owner of the LLC does not pay state unemployment or disability taxes, which means that the company does not pay disability taxes.
The S-Corp Tax ID number pays the salary to a working owner of the business and any remaining profit or loss flows through the owner’s tax return. The S-Corporation is structured under the traditional corporate setup and pays unemployment and disability tax.
The LLC and S-Corp offer plenty of benefits for a large or small business. Each can play an integral role in helping your business get off the ground and complete your tax returns each year. Knowing the difference between these numbers can help you avoid the pitfalls of starting a business.