LLC or Corporation: which to choose?
The difference that matters most in practice: an LLC tends to be simpler to maintain and more flexible in how it's taxed, making it the most common choice for service businesses, e-commerce, and small to mid-size businesses. A Corporation (C-Corp) has stricter corporate and accounting rules, but it's the structure venture capital investors typically require.
LLC (Limited Liability Company)
An LLC protects the members' personal assets (limited liability) and allows more flexibility in how the company is taxed by the IRS. It's the structure most used by service providers, consultants, e-commerce, and small businesses that don't intend to raise investment from funds.
Corporation (C-Corp)
A Corporation is a legal entity with a more formal corporate structure — shares, a board of directors, meeting minutes. It's the type of company venture capital funds typically require before investing, and it's practically the market standard for Delaware startups with a fundraising plan.
How to decide
Ask yourself: does the business intend to raise investment from venture capital funds in the medium term? If so, a Corporation (generally in Delaware) tends to be the more direct path. If the goal is to run a business, with defined members and no institutional fundraising plan, an LLC tends to be simpler and cheaper to maintain.
The decision isn't final, but changing later has a cost
It's possible to convert an LLC into a Corporation later — but that involves costs, paperwork, and, in some cases, tax implications. It's worth deciding based on the business's actual plan, not just what seems simplest at first.
Next step
Once you've decided between LLC and Corporation, the next step is choosing the state of registration.