Choosing the right business structure affects taxes, liability, and operations. Understanding the differences helps you make the right choice for your goals.
Key Takeaways
- LLCs offer flexibility and pass-through taxation
- S-Corps can save self-employment taxes
- C-Corps are preferred for venture capital
- Conversion is possible but has tax implications
LLC (Limited Liability Company)
- Flexible management structure
- Pass-through taxation (default)
- Can elect S-Corp tax treatment
- Less formal requirements
S-Corporation
- Pass-through taxation
- Potential self-employment tax savings
- Restrictions on shareholders
- Formal requirements
C-Corporation
- Double taxation (corporate and individual)
- Unlimited shareholders
- Preferred for raising capital
- Stock options for employees
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