I think what people asking "LLC vs. S Corporation?" really want are the answers to two questions:
1. Which legal form should their new business or investment take?
2. What tax treatment should they select for their new business or investment?

Fortunately, these questions can be answered--and quite easily.

To answer the question about which legal form a new business or investment should take, I almost always give the same answer: You probably want to use the LLC because an LLC gives you all the same legal protection as a regular corporation only with half the calories--er, I mean, red tape.

The tax treatment question that people ask is a bit trickier. As noted earlier, an LLC can be just about anything. So making a smart tax treatment decision is tricky and something you'll want to consider carefully. Here are some of the issues to consider:
Investments and businesses that produce losses are often best operated as a sole proprietorship or partnership so that the losses pass through to the owner's or owners' tax returns and create tax deductions.
S corporations are often best if the LLC operates an active trade or business and self-employment taxes on the owner or owners are high. Note, however, that not every business is eligible to become an S Corporation.
If an LLC holds real estate or other passive investments, an S Corporation or C corporation is usually a very poor choice since the corporation may create an extra level of taxation.
If an LLC operates an active trade or business that does business in many states, a C corporation is often easiest for the owners because a C corporation probably reduces the multistate income tax accounting burden for the owners. Note that multistate tax accounting often becomes very cumbersome for shareholders of an S corporation.

Bellevue-Redmond WA author & CPA Stephen L. Nelson wrote both Quicken for Dummies and QuickBooks for Dummies. He is also an adjunct tax professor for Golden Gate University's graduate tax school.