what is the biggest difference between a partnership and a LLC? Why?

Business & Finance
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Other than a personal liability issue, what is the biggest difference between a partnership and a LLC? Why?

Jul 30th, 2015

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 Social security and Medicare taxes

LLC members are not considered employees, so their share of the profit is not subject to social security or Medicare tax. However, LLC members who actively work in the business need to pay self-employment taxes on their income (including salary and their share of any profits). However, with a partnership, only the salaries are subject to social security and Medicare taxes. Any profit distribution isn’t subject to these taxes.  

Keep in mind that an LLC can opt to be taxed as a corporation. In this case, only the member’s salary is subject to social security and Medicare and not the profit distribution. 


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Jul 30th, 2015

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Jul 30th, 2015
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Jul 30th, 2015
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