Choosing the Right Business Entity: LLC vs. Corporation
Starting a business is exciting — but one of the first and most important decisions you’ll make is how to structure it. Your choice of entity affects everything from how you pay taxes to how much personal liability you take on as an owner. Two of the most common options for business owners are the Limited Liability Company (LLC) and the Corporation (C-Corp or S-Corp).
Why Entity Choice Matters
The legal structure of your business impacts:
Liability → Whether your personal assets are protected from business debts.
Taxes → How profits are taxed and what deductions are available.
Management → The rules for ownership, governance, and decision-making.
Growth → Your ability to raise investment capital or bring on partners.
Choosing wrong can mean higher taxes, unnecessary complexity, or even personal risk.
The LLC: Flexibility for Small Businesses
An LLC is often the go-to structure for new entrepreneurs and small businesses.
Advantages:
Limited personal liability for owners (“members”).
Simple to form and maintain compared to a corporation.
Pass-through taxation (profits flow directly to owners).
Flexible management — no need for a board of directors.
Potential Drawbacks:
Investors (especially venture capital) often prefer corporations.
Self-employment taxes can be higher in some cases.
Rules vary by state, so compliance must be managed carefully.
The Corporation: Structure for Growth
A Corporation (C-Corp or S-Corp) is more formal and structured, but often a better fit for businesses planning to scale.
Advantages:
Strong liability protection.
Easier to raise money through stock or equity.
Potential tax benefits through S-Corp election.
Perceived credibility with investors and partners.
Potential Drawbacks:
More paperwork and ongoing compliance requirements.
Separate tax filings and possible “double taxation” for C-Corps.
Less flexible management structure — must have directors, officers, and formal meetings.
Which One Is Right for You?
LLC → Best for small businesses, solo founders, or service companies that value flexibility and simplicity.
Corporation → Best for startups seeking outside investors, companies planning to scale quickly, or businesses with multiple shareholders.
How Liermo Law Can Help
At Liermo Law, we guide business owners through the formation process with flat-fee services — no surprise bills. We’ll help you:
Choose the right entity for your goals.
Draft and file Articles of Incorporation/Organization.
Prepare bylaws or operating agreements.
Handle EIN applications and basic tax elections in coordination with your CPA.
Get the peace of mind that your business is built on the right foundation — and the flexibility to adjust as you grow.