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Get small-business intelligence from the experts. Here’s a adventitious for YOU to ask your acute small-business questions, and FSB editors will advice you get answers from the adapted experts.

(FORTUNE Baby Business) — Dear FSB: My accompany and I generally dream up account for baby businesses. One catechism we can never assume to acknowledgment is whether we should absorb as an LLC or an S-corp. What are the absolute differences amid these two assimilation types? Are there tax allowances we should be acquainted of, or accepted pitfalls?

-Michael Bassik, Washington, D.C.

Dear Michael: A accountability aggregation (LLC) and an S association (S-corp) are absolutely altered things, says David Sokolow, a acclaimed chief academician at the University of Texas School of Law.

“An S-Corp is a misnomer; it’s not a anatomy of business,” he says.

Rather, it’s a tax status. S-corp refers to Subchapter S of the IRS code, which says that if a association can accommodated all the requirements, it can be burdened in the aforementioned way as a partnership.

“Traditionally, a affiliation anatomy gave you pass-through taxation, i.e., the befalling to not be burdened twice, which is what you wanted,” Sokolow says. “Partnerships don’t pay abstracted assets tax, so they’re alone burdened once. Today, you can accomplish the aforementioned array

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