Annual Compliance and Filing — The Day-to-Day Maintenance Difference Between LLCs and S Corps

　　LLCs carry a lighter compliance burden. Most states require an annual or periodic report to the Secretary of State with a fee of up to $500 per year. LLCs are not required to hold annual meetings or keep formal meeting minutes, nor must they write bylaws or follow other corporate management requirements. For taxes, a single-member LLC's rental income typically flows to your personal return via Schedule E; a multi-member LLC files Form 1065 and issues K-1s to each member.

　　S Corps carry a noticeably heavier compliance burden. By law, they must hold annual shareholder and board meetings, keep detailed minutes, and maintain thorough records. Tax-wise, they file a separate corporate return (Form 1120-S) and issue Schedule K-1s to shareholders. If you manage rentals yourself, you must pay yourself a reasonable salary, withhold taxes, and file quarterly payroll tax reports. These added tasks often require professional bookkeeping or accounting, so an S Corp only pays off when the tax savings outweigh the administrative cost.