Although an S corporation shares many of the same tax characteristics as an LLC, an LLC has more flexibility and fewer restrictions on ownership than does an S corporation.

An S corporation must not have more than 100 shareholders, all of whom must be U.S. citizens or legal residents.

An S corporation is also subject to more formalities, such as holding annual meetings and keeping corporate minutes. On the other hand, LLCs generally are not required to hold formal meetings, but an LLC owner may be subject to higher self-employment taxes than a comparable S corporation owner.

That is because an S corporation owner is required to pay self-employment tax only on salary, but not on dividends from the corporation.

There’s no difference between a fictitious business name and a DBA. A fictitious business name is often referred to as a DBA, an “assumed business name” or a “trade name”.

Generally, anyone who completes the articles of incorporation and pays the state filing fee can form a corporation. There are usually no residency or other legal requirements. However, many states require that directors and officers must be at least 18 years old.

The IRS allows corporations to choose to be taxed as either a “C corporation” or an “S corporation.”

Income from C corporations are subject to double taxation; that is, the corporation pays taxes on its net income and then the shareholders also pay taxes on the income that they receive from the corporation.

S corporations have only one level of taxation. The shareholders still have to pay taxes on money that they receive from the corporation, but an S corporation does not pay taxes on its net income.

While the S corporation is popular among small business owners, C corporations have greater tax planning flexibility and can shield shareholders from direct tax liability.