A commonly asked question by entrepreneurs and prospective small business owners during initial brainstorming sessions is “Should I go with an LLC or an S corp.?”
Well, for many Virginia small businesses, the optimal answer is BOTH. You can own and operate your business through a Virginia limited liability company AND file an election to have your LLC classified for income tax purposes as an “S” corporation. The analysis is pretty simple, but the IRS makes it more complicated than it should be. The key point to remember is that an LLC is a type of business entity recognized under state law, whereas an “S” corporation is merely a tax classification (not to be confused with stock corporations, nonstock corporations, and benefit corporations which are three types of entities recognized under state law).