LLC vs Inc: depends on how you plan to raise.

By default, LLCs are pass-through entities. The LLC itself does not pay federal income tax. Income flows to the members' personal returns via Schedule K-1 (multi-member) or Schedule C (single-member). Members pay tax at their individual rates.

By default, C-Corps are subject to double taxation. The Corporation pays 21% federal corporate income tax on profits. When profits are distributed as dividends, shareholders pay dividend tax (15-23.8% federal, plus state). Total combined rate can exceed 40%.

S-Corp election (Form 2553) is available to both LLCs and Corporations that meet eligibility. S-Corp avoids double taxation; income flows through to owners' personal returns. Restrictions: 100 shareholders max, US individuals only, single class of stock.

For most operating businesses, LLC pass-through is more tax-efficient. For venture-backed startups, the C-Corp double taxation is offset by QSBS (Section 1202): up to $10M (or 10x basis) of capital gains exclusion on qualifying C-Corp stock held more than 5 years. This is the single largest tax-planning argument for C-Corp over LLC in startup formation.

State filing fees for LLCs range from $35 (Montana) to $520 (Massachusetts). State filing fees for Corporations are similar in some states, much higher in others (Nevada $725 includes initial list + business license). Our service fee is $0 for either.

Ongoing costs differ. LLCs typically pay an annual report fee ($25 to $300 by state) and may have franchise tax depending on the state. C-Corps file federal corporate income tax annually (Form 1120, separate from the owner's personal return), state corporate income tax, and Delaware franchise tax if incorporated in Delaware ($175 to $200,000+ depending on share structure).

Delaware franchise tax for typical 10M-share startup C-Corps using the Authorized Shares Method is ~$170-$450 first year. Most startups use the Assumed Par Value Method, which can be much cheaper for early-stage companies.

Both LLCs and Corporations provide a liability shield. Owners are not personally liable for business debts or lawsuits in either structure, as long as the entity is maintained properly (separate accounts, no commingling, follow governance formalities, file annual reports).

The Corporation has more formality requirements: annual shareholder meetings, board meetings, meeting minutes, formal resolutions for major decisions. Missing these can be evidence of "veil piercing" if a creditor challenges the corporate shield in court.

The LLC has fewer required formalities. An Operating Agreement that is followed and a separate bank account are usually enough to maintain the shield.

In practice, both structures provide effective liability protection. The Corporation is slightly more strong in court because of the longer case-law history and clearer formality expectations.