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Form the right type of business

Setting up the right type of business entity is the first step to success. As an entrepreneur you have many choices and knowing the advantages of an LLC or a C-corporation can help you save on taxes and take on investors or venture capital.

Types of Business Entities


The most common type of business entity, a Limited Liability Corporation, is easy to setup and manage.

C Corporation

A C Corporation has a specific business structure, can issue shares to founders, investors and employees.  

S Corporation

Suitable for smaller companies, can have max 100 shareholders, taxed once.

Why this matters?

Choosing the right business structure is crucial for legal, financial, and operational reasons.


Here's a comparison of LLCs, C-Corporations, and S-Corporations, outlining their pros and cons:


LLC (Limited Liability Company)



  1. Limited Liability Protection: Owners are protected from personal liability for business debts and claims.

  2. Flexible Management Structure: Fewer formalities and more flexibility in management compared to corporations.

  3. Pass-Through Taxation: Profits and losses can be passed through to the owner's personal income without facing corporate taxes.

  4. Less Compliance Requirements: Fewer ongoing formalities and compliance requirements than corporations.



  1. Self-Employment Taxes: Members may need to pay self-employment taxes on their share of the LLC’s income.

  2. State-Specific Rules: LLC regulations vary by state, which can complicate setup and operation if doing business in multiple states.

  3. Limited Life: In some states, if a member leaves, the LLC may need to be dissolved, though this can often be mitigated by an operating agreement.



  1. Limited Liability: Shareholders are not personally liable for corporate debts and liabilities.

  2. Unlimited Growth Potential: Can have an unlimited number of shareholders and can raise capital through the sale of stock.

  3. Attracting Investors: Preferred structure for attracting venture capital and institutional investors.

  4. Perpetual Existence: The corporation continues to exist even if ownership or management changes.


  1. Double Taxation: Earnings are taxed at the corporate level and again at the shareholder level when distributed as dividends.

  2. Complex and Costly Setup: More complicated and expensive to establish and maintain than an LLC.

  3. Regulatory Requirements: More stringent compliance requirements, including annual reports, shareholder meetings, and detailed record-keeping.




  1. Pass-Through Taxation: Avoids double taxation as income is passed through to shareholders’ personal tax returns.

  2. Limited Liability: Shareholders are protected from personal liability for business debts and claims.

  3. Perpetual Existence: Similar to C-corporations, S-corporations continue to exist regardless of changes in ownership.

  4. Salary and Dividend Payments: Owners can pay themselves a reasonable salary and receive dividends, potentially lowering overall tax liability.


  1. Eligibility Restrictions: Must meet specific requirements, such as having no more than 100 shareholders and only one class of stock.

  2. Tax Qualification Obligations: Stricter tax filing requirements and rules, including reasonable compensation for shareholders who are employees.

  3. Limited to U.S. Residents: Shareholders must be U.S. citizens or residents.

  4. State Taxes: Some states do not recognize S-corporation status and will tax the corporation as a C-corporation.


  • LLC: Best for small to medium-sized businesses seeking flexibility and simplicity with personal liability protection.

  • C-Corporation: Ideal for businesses planning to raise significant capital, attract investors, or go public, but prepared for double taxation and regulatory requirements.

  • S-Corporation: Suitable for small businesses wanting to avoid double taxation while benefiting from limited liability, provided they meet eligibility criteria.

Choosing the right structure depends on factors like the size and nature of your business, your growth plans, and your tax considerations. Consulting further with a legal or financial advisor can help make the best choice.


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