LLC vs C Corporation: What's Right for Your Business?
Wondering if you should form an LLC or a C Corporation? Here's a clear breakdown of the pros, cons, taxes, and filing process for each.
Start Your LLC for $49What's the Difference Between an LLC and a C Corp?
Both LLCs and C Corporations are legal business structures, but they work very differently:
LLC (Limited Liability Company)
- Pass-through taxation (profits flow to owners)
- Simpler management structure
- Flexible ownership rules
- Easier to form and maintain
C Corporation
- Double taxation (corporate + personal)
- Formal board of directors required
- Can issue stock to raise capital
- More complex compliance requirements
LLC Pros and Cons
✅ Pros
- Pass-through taxation (no double taxation)
- Simpler formation and maintenance
- Flexible management structure
- Personal liability protection
❌ Cons
- Limited ability to raise capital
- Can't issue stock
- May not be ideal for large-scale growth
C Corporation Pros and Cons
✅ Pros
- Can issue stock to raise capital
- Ideal for large-scale growth
- Can go public (IPO)
- Strong credibility with investors
❌ Cons
- Double taxation (corporate + personal)
- Complex formation and compliance
- Required board of directors
- More expensive to maintain
Taxes: LLC vs C Corp
LLC Taxation
Pass-through taxation means:
- Profits flow directly to owners
- No corporate-level tax
- Owners pay personal income tax
C Corp Taxation
Double taxation means:
- Corporation pays corporate tax
- Owners pay personal tax on dividends
- Higher overall tax burden
Which Is Best for Small Businesses or Startups?
For most small businesses and startups, an LLC is the better choice because:
- Simpler formation and maintenance
- Lower tax burden (no double taxation)
- More flexible management structure
- Easier to convert to C Corp later if needed
How to Switch from LLC to C Corp
If you start with an LLC and later need C Corp benefits, you can convert:
- File Articles of Incorporation
- Transfer LLC assets to the corporation
- Set up board of directors
- Update tax elections with the IRS
Ready to form your LLC?
Most small businesses choose LLCs for their simplicity and tax benefits.
Start Your LLC for $49Includes step-by-step filing, EIN help, and your documents.