Fortress or Castle? LLC vs. Corporation (Which Do You Need?)

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.