Resource · 5 min read
LLC vs. Corporation: Which One Should You Form?
Liability protection is roughly equal in both — the real differences are in taxes, paperwork, and who you plan to raise money from.
Where they're the same
Both an LLC and a corporation (C-Corp or S-Corp) shield your personal assets from business liabilities. If protecting your personal savings is your only concern, either structure gets that job done.
Where they actually differ
Taxes: by default, an LLC's profits pass through to the owners' personal tax returns and are taxed once. A C-Corp is taxed on its profits, and then shareholders are taxed again on dividends — double taxation, unless you elect S-Corp status.
Paperwork: corporations require a board of directors, annual shareholder meetings, and formal meeting minutes. LLCs don't require any of that — you run it however your operating agreement says to.
Raising money: if you're planning to raise venture capital or issue stock options to employees, most investors expect a Delaware C-Corp. If you're bootstrapping, running a services business, or keeping ownership simple, an LLC is usually the better fit.
The practical answer
Most small businesses, freelancers, agencies, and e-commerce sellers are better off with an LLC — lower cost, less paperwork, and flexible taxation. If you already know you're raising institutional funding, talk to a formation specialist about a C-Corp before you file anything.