LLC vs. Corporation: Which Fits Your Business?
Almost every new owner asks the same question: LLC or corporation? Both protect your personal assets. The real differences are in taxes, ownership, and where you're trying to take the business.
The LLC
An LLC is flexible and simple. By default, profits "pass through" to your personal tax return, so the business itself usually isn't taxed separately. There are fewer formal requirements — no mandatory board, fewer meetings, less paperwork. For most solo founders, family businesses, and local service businesses, an LLC is the natural starting point.
The corporation
A corporation is more structured — it has shareholders, a board, and formal recordkeeping. A C-corporation is taxed as its own entity, which can mean "double taxation," but it's the structure outside investors and venture capital expect. An S-corporation is a tax election (available to qualifying LLCs and corporations alike) that can reduce self-employment taxes once you're profitable enough for it to make sense.
How to think about it
- Staying local, bootstrapping, or solo? An LLC is usually the cleanest fit.
- Planning to raise venture money or issue stock to investors? A C-corporation is typically expected.
- Profitable and wondering about taxes? Ask about an S-corp election — but only with a CPA who's run your numbers.
The honest answer: most businesses we work with start as an LLC, and that's the right call. The structure isn't permanent — you can change it as the business grows. What matters most is choosing deliberately instead of by accident.
Don't guess on this one
Structure affects your taxes and your liability, so it's worth getting right. We'll talk it through with you and bring in a volunteer CPA or attorney when the tax tradeoffs get specific.