The structure you pick shapes your taxes, paperwork, and ability to raise money. For most founders it comes down to the LLC's simplicity versus the corporation's investor-friendliness.
The LLC
- Pass-through taxation by default — profits flow to your personal return, avoiding corporate double taxation.
- Minimal formalities — no board, no stock, light record-keeping.
- Flexible — can elect S-corp or C-corp taxation later if it makes sense.
The corporation (C-corp)
- Issues stock — the structure venture investors expect.
- Separate taxable entity — can mean double taxation, but also enables certain tax planning.
- More formalities — board, bylaws, minutes, filings.
How to choose
| Choose an LLC if… | You want simplicity, pass-through taxes, and you're not raising venture capital. |
|---|---|
| Choose a C-corp if… | You plan to raise from VCs, issue stock/options, or want a scalable equity structure. |
| Consider S-corp election if… | Your LLC is profitable and self-employment tax is a burden (US persons; talk to a tax pro). |
Some links on this page are partner links. We may earn a commission at no extra cost to you — always labeled. For official filings you can use your state's .gov registry directly. This is general information, not legal or tax advice.
Frequently asked questions
Is an LLC or corporation better for a small business?
For most small businesses and solo founders, an LLC is simpler and cheaper to run. Choose a corporation if you plan to raise venture capital or issue stock.
Can an LLC be taxed as an S-corp?
Yes. An LLC can elect S-corp taxation, which can reduce self-employment tax for profitable businesses. This is a tax election, not a separate entity.
Which is better for non-residents?
Non-residents most often form an LLC for its simplicity and pass-through treatment, though those selling equity to investors sometimes choose a C-corp. Tax outcomes vary by country — get advice.