Choosing the right business entity affects your taxes, liability, fundraising ability, and paperwork burden. This tool compares LLCs and corporations side-by-side and gives a quick recommendation based on your situation.
| Factor | LLC | C-Corporation | S-Corporation |
|---|---|---|---|
| Formation Cost | Low ($50–$500) | Medium ($100–$800) | Medium ($100–$800 + S election) |
| Annual Maintenance | Low — fewer formalities | High — annual meetings, minutes, reports | High — same as C-Corp |
| Liability Protection | Yes | Yes | Yes |
| Taxation | Pass-through (default) | Double taxation (corporate + dividend) | Pass-through |
| Self-Employment Tax | All profits subject to SE tax | Only salary; dividends not subject | Salary subject; distributions not |
| VC / Investor Friendly | Limited — VCs prefer C-Corps | Yes — preferred shares, options | No — restrictions on shares |
| Stock Options (ESOP) | No standard option plan | Yes — ISO, NSO, 83(b) elections | Limited options available |
| Owner Restrictions | None — flexible membership | None for C-Corp | ≤100 shareholders, US citizens only |
| Best For | Small businesses, freelancers, real estate | Startups raising funding | Profitable small businesses |
Not legal or tax advice. Consult an attorney and CPA before forming a business entity.