LLCs and C Corporations
are two of the most common business entities available to entrepreneurs in the US. After you’ve determined why you should form a company it’s important to understand the key differences in entity type to decide which can work best for you. This is one of the most important decisions founders will make and it’s usually the first legal decision you handle by yourself. That’s why we want to make sure you choose the right structure to support your company’s vision and goals.
This article covers the key differences between LLCs and C Corporations for anyone looking to understand both options.
LLC vs. C Corporation Basics
Both LLCs and C Corporations allow founders and their partners to limit their responsibility to company debts and liabilities. With both options offering limited liability, it’s important to consider how you intend to structure the ownership and management of your business, your personal and company goals, and your potential tax obligations before deciding on your entity.
A C Corporation (C-Corp) is a legal entity known for its “double taxation,” where the C Corporation pays corporate income taxes and shareholders pay personal income taxes based on gains made from dividends or the sale of C Corporation stock.
A Limited Liability Company (LLC) is a business structure formed by members (rather than shareholders) who all pay taxes as a share of personal income, often referred to as a “pass through” tax structure.
LLC vs. C Corporation: Comparison Overview
It’s always important to consider your long and short term goals before choosing between an LLC and a C Corporation. Both structures offer different advantages and disadvantages based on taxation, liabilities, issuance of stock and regulation.
Below is a helpful chart that outlines the key differences:
How to Register your company in the USA
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For more information on registering a company in the USA, the commercial advantages you can benefit from and support click here.
