What it is
LLC and C-corp are two US legal structures for your company. An LLC is flexible with pass-through taxation; a C-corp is a separate taxable entity and the standard for venture-backed startups.
Facts
- LLC: pass-through taxation (profits taxed once, on owners' returns), flexible management, but can't issue stock/options the way investors expect.
- C-corp: subject to potential double taxation (corporate profits, then dividends), but supports preferred stock, stock options, and clean cap tables.
- Most institutional US venture investors strongly prefer or require a Delaware C-corp.
- US founders may qualify for QSBS capital-gains exclusion only via a C-corp.
Who it's for
Every US founder choosing an initial entity, the choice hinges on whether you'll raise venture capital.
How it helps you
Picking the right entity avoids costly conversions later and ensures you can issue equity to investors and employees when needed.
Caveats
This is educational, not legal/tax advice, consult a professional. Converting an LLC to a C-corp later is possible but adds cost and complexity, so plan around your funding path.
Conclusion
If you'll raise venture capital, a Delaware C-corp is usually the answer; if you're bootstrapping a smaller business, an LLC's simplicity and pass-through tax often win.
