07/08/2026
Most founders pick an LLC because someone told them to. Few actually understand what that choice means for their taxes, their liability, or their ability to grow.
Here's the breakdown:
The LLC protects your personal assets from business debts and lawsuits. By default it's a pass-through entity — profits flow to your personal tax return with no corporate-level tax. Flexible, simple, and works well for most small to mid-size businesses.
The C-Corp is what large companies and venture-backed startups use. It pays corporate income tax, and then shareholders pay personal income tax on dividends. That double taxation is why most small businesses avoid it — but if you're raising outside investment or planning to go public, it's often the required structure.
The S-Corp is not a separate entity. It's a tax election. You can be an LLC and elect to be taxed as an S-Corp. You pay yourself a reasonable salary — only that salary is subject to self-employment tax. The remaining profit comes to you as a distribution, not subject to that same tax. On $150K in profit, that difference can be thousands of dollars annually. But it only makes sense once you're consistently profitable.
The right answer depends on your revenue, your growth plans, and your tax situation. There is no universal answer — but there is a wrong one.
Watch the full breakdown on YouTube 👇
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📍 Business Law Group | New Orleans, LA
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