LLC or Corporation: which do you need?
LLC:
✅ Simpler formation and maintenance
✅ Flexible management structure
✅ Pass-through taxation
✅ Less formality (no board meetings required)
✅ Can elect S-Corp taxation later
❌ All income is subject to self-employment tax (unless you elect S-Corp)
Corporation:
✅ Maximum liability protection
✅ Easier to raise venture capital (C-Corp)
✅ Can issue stock options to employees
✅ S-Corp election reduces self-employment tax
❌ More formalities (board meetings, minutes, bylaws)
❌ C-Corps face double taxation
❌ More expensive to form and maintain
For most small businesses: Start with an LLC.
It provides liability protection and flexibility without excessive formalities.
Choose C-Corp only if:
- You’re raising venture capital,
- You’re planning to go public, or
- You need multiple classes of stock.
Consider S-Corp election when:
- You’re profitable (ask your tax professional),
- You work full-time for the business, and
- You want to reduce the self-employment tax.
Your most powerful business tools include intellectual property protection. If you’re ready to build a strong business and brand, and protect what you create, you don’t have to figure it out alone.
I help entrepreneurs in Illinois with their business formation and transactions, and I help entrepreneurs across the U.S. make smart, legally sound decisions about their intellectual property. I’m an attorney in Champaign-Urbana, Illinois. I serve business owners in Illinois, and I serve intellectual property clients nationwide.
Ready to protect your work? Book a consultation online at kingpatentlaw.com or call 217-714-8558.
For more information on intellectual property and business law, check out the other posts on this site, listen to my podcast “Spellbinding IP: Patent, Trademark, and Business Strategy” on all major podcast platforms (video available on YouTube, Spotify, and Substack), or follow me on social media at @kingpatentlaw.
Avoid the legal horrors, and keep rocking your IP.
RSS - Posts
