What type of company should you choose?

Understanding Business Structures: LLC, C-Corp, and S-Corp

Choosing the right business structure is important, especially when thinking about liability protection, taxes, and future growth. Here’s a simple breakdown of three common options:

Limited Liability Company (LLC)

An LLC is a flexible business structure that protects its owners (called "members") from personal liability. It's a favorite among small business owners and entrepreneurs because it's easy to manage and offers tax flexibility.

✅ Pros:
✔️ Protects owners from personal liability
✔️ Simple to set up and operate
✔️ No limit on the number of owners (U.S. or international)

❌ Cons:
✖️ Cannot issue stock, making it harder to attract investors
✖️ Ownership is represented by members instead of shares

C-Corporation (C-Corp) – Often Seen as “Inc.”

A C-Corp is a separate legal entity from its owners, offering strong liability protection. This is the go-to structure for companies looking to grow and attract investors. When you see a company name ending in “.Inc” (Incorporated), it’s often a C-Corp, though it could also be an S-Corp.

✅ Pros:
✔️ Protects owners from personal liability
✔️ Can raise money by issuing stock
✔️ Ownership is represented by shareholders

❌ Cons:
✖️ More rules and formalities to follow compared to an LLC

S-Corporation (S-Corp) – Also Known as “Inc.”

An S-Corp blends the benefits of a corporation and a pass-through entity, meaning it avoids double taxation. Like a C-Corp, an S-Corp is also considered an “Inc.” in its legal name. However, there are some restrictions on ownership.

✅ Pros:
✔️ Protects owners from personal liability
✔️ Profits pass directly to owners, avoiding corporate taxes
✔️ Can raise money by issuing stock

❌ Cons:
✖️ Only U.S. citizens or residents can be shareholders
✖️ Limited to 100 shareholders

Which One is Right for You?

• If you want simplicity and flexibility, go with an LLC.

• If you plan to scale and attract investors, a C-Corp (or Inc.) might be best.

• If you like the idea of avoiding corporate taxes and meet the requirements, an S-Corp (or Inc.) could be a great option.

Need help deciding? Talk to our team to find the best fit for your business! 🚀