Brazilians looking to start a business in the United States face three main structure options: LLC, S Corp, and C Corp. Each carries different tax, operational, and legal implications. Understanding these differences prevents IRS surprises and ensures you choose the right model from day one.
Why business structure matters
When you decide to start a business in the United States, the first technical question that comes up is: LLC, S Corp, or C Corp? The answer is not about which one is better in the abstract. It is about which one fits your case: type of activity, whether you live in the US or Brazil, whether you have American partners, whether you plan to seek outside investment, and how you want to be taxed.
Choosing wrong does not break the company overnight, but it creates friction: you may pay more tax than you should, face unnecessary bureaucracy, or discover you need to restructure everything when you scale. The good news is that each structure has a clear profile. Let's get straight to what matters.
LLC: flexibility and operational simplicity
The Limited Liability Company is the most common structure among Brazilians opening a business in the US. The reason is simple: it offers asset protection (your personal assets are separate from the company's debts) with less bureaucracy than a traditional corporation.
From a tax perspective, the LLC is treated as a pass-through entity by default. This means profit flows directly to the owner and is taxed on their personal return. If you are the sole owner (single-member LLC), the IRS treats it as if you were self-employed. If you have partners, it becomes a partnership. There is no separate corporate tax, which simplifies things considerably.
But pay attention: if you live in Brazil and open an LLC in the US, the Brazilian Federal Revenue Service may consider this company as a controlled entity abroad. This creates an obligation to declare in Brazil and, depending on the case, pay tax there as well. Formalizing your tax exit from Brazil, when applicable, helps avoid this double taxation.
The LLC works well for: service providers, consultants, small local businesses, e-commerce, or any operation where you want to start quickly without heavy structure. It does not work for those who plan to go public or attract institutional investors, because they prefer corporations.
S Corp: payroll tax savings
The S Corporation is not a different legal structure. It is an LLC or C Corp that made a special tax election with the IRS. When you elect S Corp status, the company remains a pass-through entity (profit flows to the owner), but with an advantage: you can pay yourself a reasonable salary and distribute the rest of the profit as dividends, which do not pay Social Security and Medicare taxes.
Practical example: if your LLC profits 120 thousand dollars a year and you did not make the S Corp election, you pay self-employment tax (about 15%) on the full 120 thousand. If you elect S Corp, you pay yourself a salary of 60 thousand (taxed normally) and distribute 60 thousand as dividends (no self-employment tax). The savings can be significant.
But there are strict rules. To elect S Corp status, you must: be a US tax resident or citizen, have no more than 100 shareholders, all of them individuals (no companies as partners), and issue only one class of stock. If you live in Brazil, you cannot elect S Corp. If you have a non-resident Brazilian partner, you cannot either.
The S Corp works well for: high-revenue service providers living in the US, professionals (doctors, lawyers, consultants), small businesses with consistent profit above 60-80 thousand dollars a year. Below that, the tax savings do not offset the extra payroll bureaucracy.
C Corp: structure for growth and investment
The C Corporation is the classic American structure. Unlike the LLC and S Corp, it is taxed as a separate entity. The company pays federal corporate tax (currently 21%) on profit. When it distributes dividends to owners, they pay personal tax again. This is the famous double taxation.
So why would anyone choose C Corp? Because it offers flexibility that the others do not: you can have foreign partners without restriction, issue different classes of stock (with different rights), attract institutional investors, and eventually go public. If you plan to scale quickly, seek venture capital, or build something that will be worth much more than annual profit, C Corp makes sense.
Another point: if you live in Brazil and have a C Corp in the US, taxation becomes more predictable. The company pays tax there, you declare dividends here according to Brazilian rules. There is no confusion of the pass-through LLC, where the Brazilian tax authority may want to tax profit that is still in the company.
The C Corp works well for: startups seeking outside investment, technology companies with exponential growth potential, businesses that need robust governance structure, or when you have partners in multiple countries and want to avoid individual tax complications.
How to choose (and when to change)
The right structure depends on where you live, how you plan to grow, and how much profit the company will generate. If you are starting out, live in the US, and want simplicity: LLC. If you already have good revenue and live in the US: consider electing S Corp. If you plan to seek investment or have international partners: C Corp from the start.
No choice is permanent. You can start as an LLC and elect S Corp later. You can convert LLC to C Corp when seeking investment. But each change has cost and tax implications. The ideal is to get it right at the start, or at least know you will need to adjust in the future and plan for it.
The most common mistake is copying someone else's structure without analyzing your own case. What works for a service provider living in Boston does not work for a Brazilian living in São Paulo with e-commerce in the US. Each situation has specific variables: immigration status, country of tax residence, type of activity, revenue volume, and growth plan.
Next steps
If you are thinking about opening a company in the United States, the first step is not to register. It is to map your case: where you live, what your tax situation is in Brazil, what type of operation you will run, and what you plan to do in the next three years. With these answers, the choice between LLC, S Corp, and C Corp becomes clear.
JJD analyzes the complete scenario and indicates the most appropriate structure for your case. If you already have a company and want to know if you are in the right structure, or if you need to adjust something before growing, it is worth talking. The guidance is personalized, because each case is unique.
Contact JJD and request an assessment of your scenario before opening or restructuring your company in the US.