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Differences between an LLC and a S Corporation
Rules regarding ownership
One of the most important differences between an LLC and an S Corporation regards the ownership rules. If you form an LLC, there can be an unlimited number of members. If you form an S Corporation, you can only have a maximum of 100 shareholders. (If you want to have more shareholders, you can instead opt for the C Corporation. If you create a C Corporation, it will also be possible to use different stock classes, something which is not permitted for S Corporations.)
How to form
When it comes to required documentation, there are major differences between an LLC and an S Corporation. If you want to set up an LLC, you only need an Operating Agreement and Articles of Organization / Certificate of Formation. If you instead want to form an S Corporation, you will need Articles of Incorporation, Organizational Board Resolutions, Stock Ledger, Stock Certificates, Bylaws and the IRS & State S Corporation election. The IRS & State S Corporation election is what turns a C Corporation into an S Corporation.
Capital
For an S Corporation, the most common way to obtain the necessary capital is to have shareholders purchasing stock in the corporation. Unlike a C Corporation, the S Corporation can only have one class of stock. The LLC on the other hand will usually receive capital by having its members contributing with money or services to the LLC, in return for an interest in profits as well as losses.
Management
AnS Corporation is managed just like a C Corporation; there is a Board of Directors with overall management responsibility and Officers with day-to-day responsibility. This is one of the main differences between an LLC and an S Corporation, because in the LLC the Operating Agreements will determine how the company will be managed. The company can elect a member (owner) to manage the business or designate a Manager.
Tax Treatment
In an ordinary C Corporation, the corporation is taxed and shareholders are only taxed in the event of dividends distribution. In the LLC, profits and losses are passed on to the members and the company is therefore not taxed, each member is. By filing the IRS Form 2553, you change your C Corporation into an S Corporation and both profits and losses will then be passed to the shareholders, just like in an LLC. (It should be noted that an LLC can choose to be taxed and this will naturally change its tax treatment.)
Personal Liability
The owner of an LLC is called a member while the owner of an S Corporation is referred to as a shareholder, but this does not really affect personal liability. Generally speaking, there are no significant differences between an LLC and an S Corporation regarding personal liability. The general rules do however come with notable exceptions, and it is therefore always a good idea to contact a legal expert if you need to know more about this area. | 
