LLC FILING AS S CORP. ARE THERE SUPPOSED TO BE SHAREHOLDERS

[M-MTax]

No, the members of the LLC are still members, not shareholders. Filing as an S corporation does not alter the nature of the LLC.

[Mike9241]

from an income tax standpoint each member is issued a k-1 for their share of income/loss, deductions, credits and distributions. the k-1 uses the terms "shareholder's" and "corporation".  Thus, there is this technical difference. an LLC not electing S-Corp can make disproportionate allocations. An "S-corp" that did this may be deemed to have a second class of stock which would void the S-election.   

[M-MTax]

I concur, generally, but if the authorization to allocate items of income and deduction not in proportion to ownership interests is in the LLC's operating agreement, and the members plan to continue to do so, then electing treatment as corporation for federal income tax purposes would not be recommended.