Legal Question in Business Law in California

Re: LLC vs C-Corp?

Why would you limit your choices to an LLC and a "C" corporation? For most new businesses, the choice is between an LLC and a corporation which, after formation, will elect to be taxed as an "S" corporation. (You could also be a partnership or a sole proprietorship, but those forms of business entity have drawbacks).

Note that at the time you form your corporation, it is neither an "S" nor a "C" corporation; it is just a corporation. Whether it is "S" or "C" depends upon a post-incorporation election you make. Actually, the IRS will treat your corporation under the "C" corporation rules unless you elect "S" status. The point is that there is no distinction at the time of formation with the Secretary of State of California (or wherever); those letters have no meaning to the incorporating authority.

If you ever wanted to add a nonresident alien as a co-owner, an LLC would allow this but an "S" corp. cannot have a nonresident alien as a shareholder.

There are also somewhat esoteric tax reasons for sometimes preferring an LLC and sometimes preferring an "S" corporation. An accountant could advise you on this choice, but my guess is that it will not make a lot of difference to your business.