What is the difference between an LLC and a C-Corp?
An LLC is a flexible structure with pass-through taxation by default and lighter paperwork. A C-Corporation is built for stock ownership, venture capital and employee equity, and pays corporate income tax.
Incorpify forms two types of company: an LLC and a C-Corporation. You choose on the Entity Type step.
LLC (Limited Liability Company)
- A flexible structure with pass-through taxation by default and limited liability.
- Lighter paperwork.
- A common fit for owner-operated businesses and bootstrapped startups.
- Owners enter an ownership percentage. The percentages must add up to exactly 100.
- The default ending is "LLC". Your governing document is an operating agreement.
C-Corporation
- Designed for stock ownership, venture capital, employee equity and international investors.
- Pays corporate income tax.
- Owners hold shares, and the app shows the percentage each person owns.
- After checkout you add a Roles step: a President, a Secretary, a Treasurer and at least one Director. One person can hold every role.
- The default ending is "Inc.". Your governing document is a set of bylaws.
How it changes the setup
| LLC | C-Corp | |
|---|---|---|
| Ownership | Percentages that total 100 | Shares |
| Extra step after checkout | None | Roles |
| Default ending | LLC | Inc. |
| Governing document | Operating agreement | Bylaws |
If you change the entity type, the name ending resets to the default for that type.