Comparison
LLC or C-Corp: which structure should you choose?
The two most common US business structures meet different needs. Here are the differences that matter for a non-resident entrepreneur.
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| Criterion | LLC | C-Corporation |
|---|---|---|
| Default federal taxation | Pass-through: the LLC is not taxed at the federal level, results are allocated to its members | 21% corporate income tax, then tax on distributed dividends |
| Typical annual filing (non-resident) | Form 5472 + pro forma 1120 (single member) or Form 1065 (several members) | Form 1120, with Form 5472 if a foreign shareholder owns at least 25% |
| Internal formalities | Flexible: Operating Agreement, little formality | More structured: board of directors, minutes, shares |
| Fundraising | Possible but rarely accepted by venture capital funds | The standard investors expect (often a Delaware C-Corp) |
| Maintenance cost | Usually lower | Usually higher (bookkeeping, filings) |
| Typical profile | Freelancers, consultants, e-commerce, businesses profitable from day one | Startups planning to bring in investors |
Choose an LLC if…
- You don't plan to raise money from investors
- You want simple management and lower costs
- You bill for services or sell online
Choose a C-Corp if…
- You are aiming for a venture capital round
- You want to grant shares or stock options
- You plan to reinvest profits in the company
This comparison is for information and is not tax or legal advice. The right choice depends on your personal situation and your country of residence.
Frequently asked questions
Can an LLC become a C-Corp later?
Yes. An LLC can elect to be taxed as a corporation (Form 8832) or be legally converted into a C-Corp. The tax consequences should be reviewed with a professional.
Does ClicGlow form C-Corps?
Our services focus on LLCs. If your project needs a C-Corp, talk to our team so we can look at your situation.
Which structure pays the least tax?
It depends on the nature of your income, its connection to the United States, your country of residence and tax treaties. No general answer is reliable: get advice.
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