LLC Vs. C-Corp Vs. S-Corp

Before founders can kick-start operations, bring in customers, or engage investors, they are advised to create a legal entity to pursue such milestones. Establishing a legal entity serves several key purposes: the founder can limit his or her liability; present a professional, commercial organization behind his or her idea; and fundraise via issuance of ownership interests. Choosing which entity to select presents the first of many questions a founder will need to consider.

Overview of LLCs, S-Corps, and C-Corps

The most popular types of entities that founders select for their companies are limited liability companies (LLCs) and corporations, with two types of corporations to choose from: C-Corporation (C-Corps) and S-Corporation (S-Corp). The main differences among these entity choices are tax treatments, ownership requirements, and formalities and duties that are imposed on founders and fiduciaries. These differences should be carefully considered in