LLC, S Corp or C Corp: which structure to choose in the US

Why the structure choice matters from day one

When you decide to start a business in the United States, the first technical question that comes up is not about product, market or customers. It is about legal structure. LLC, S Corp, C Corp: three acronyms that seem simple but carry tax, operational and legal consequences that will follow the business for years.

The wrong choice does not break the company overnight. But it creates friction: you pay more tax than you should, face unnecessary bureaucracy, or discover too late that the chosen structure no longer fits the current stage of the business.

For Brazilians, the decision has extra layers: immigration status, tax treaties between Brazil and the US, and the relationship with the Brazilian Federal Revenue Service if you still have ties in Brazil. The good news is that each structure has a clear profile. The bad news is that nobody warns you about this before you sign the papers.

LLC: personal protection with tax flexibility

The Limited Liability Company is the most common structure among small entrepreneurs and freelancers in the United States. The name already delivers the main advantage: limited liability. Your personal assets are protected if the company faces debts or lawsuits.

From a tax perspective, the LLC is a pass-through entity. This means that company profit is not taxed at the corporate level. It passes directly to the members, who report and pay tax as individuals. For those starting out, this simplifies life: fewer filings, less complexity.

The LLC accepts foreign members without restrictions. You can open an LLC even without a work visa or green card. But attention: if you are not a US tax resident, the LLC may generate tax obligations both here and in Brazil, depending on how you structure the operation and where you actually live.

Another important point: the LLC does not issue stock. This limits future options if you want to attract institutional investors or go public. For businesses that will grow fast and need investment rounds, the LLC may be a starting point but rarely the end point.

S Corp: tax savings for those with consistent revenue

The S Corporation is not a different structure from the LLC or C Corp. It is a tax election you make with the IRS. Both an LLC and a C Corp can elect to be treated as an S Corp for tax purposes.

The main advantage of the S Corp is savings on payroll taxes. When you own an LLC treated as a sole proprietorship or partnership, all profit you withdraw is taxed as self-employment income, which includes Social Security and Medicare (15.3% combined). In the S Corp, you pay yourself a reasonable salary (subject to payroll taxes) and the rest of the profit comes out as a distribution, which does not pay those 15.3%.

But the S Corp has heavy restrictions. It can only have up to 100 shareholders, all must be individuals (not companies), and all must be US citizens or permanent residents. In other words: if you are a Brazilian without a green card, you cannot be a member of an S Corp. This rule eliminates the S Corp as an option for most foreign entrepreneurs.

In addition, the S Corp requires greater operational formality: mandatory payroll, documented shareholder meetings, recorded minutes. For those starting alone or with a partner, this bureaucracy may weigh more than the tax savings.

C Corp: structure for growth and external investment

The C Corporation is the standard structure of large American companies. Unlike the LLC and S Corp, the C Corp is taxed as a separate entity. The company pays tax on profit (currently 21% at the federal level), and shareholders pay tax again when they receive dividends. This double taxation is the main argument against the C Corp for small businesses.

But the C Corp has structural advantages that no other offers. It can have an unlimited number of shareholders, of any nationality, including other companies. It can issue different classes of stock (with distinct rights and preferences), which facilitates investment rounds. And it is the only structure that venture capital funds and institutional investors accept without reservations.

For Brazilians who want to scale fast, attract external capital or eventually go public, the C Corp is the natural choice. Double taxation ceases to be a problem when the focus is on reinvesting profit in the company, not distributing dividends.

Another important detail: the C Corp allows deductions for expenses that other structures do not accept as easily, such as certain employee benefits and stock option plans. If you are building a team and want to use equity as part of compensation, the C Corp simplifies everything.

How to choose between LLC, S Corp and C Corp

The decision depends on three main variables: your immigration status, the stage of the business and growth plans.

If you are a foreigner without a green card and are starting alone or with few partners, the LLC is the most direct path. It gives you legal protection, tax flexibility and accepts members of any nationality. You can elect C Corp tax treatment later if needed.

If you already have a green card or US citizenship, consistent revenue above sixty thousand dollars per year and do not plan to raise external capital in the short term, the S Corp can generate real tax savings. But it only makes sense if the savings exceed the extra compliance cost.

If you are building a tech startup, plan to raise investment rounds or want a structure that allows aggressive growth, go straight to the C Corp. Double taxation is irrelevant when you do not distribute profit, and the flexibility to issue stock compensates for any initial tax disadvantage.

And there is a detail that many people forget: you can change structure. Starting as an LLC and converting to a C Corp later is common and relatively simple. The opposite (C Corp to LLC) is more complicated and may generate tax. So when in doubt, start simple.

What JJD can do for you

Choosing the right structure is not a decision you make alone by reading articles on the internet. Each case has nuances: where you live, whether you still have tax ties in Brazil, whether you plan to return, whether you will hire employees, whether you have American or foreign partners.

JJD analyzes your complete scenario and indicates the structure that makes sense now, with a view of what you will need in the next two or three years. There is no generic answer. There is a right answer for your case.

If you are planning to open a company in the United States or have already opened one and want to review whether the structure still fits, talk to JJD. The conversation starts with simple questions and ends with a clear plan.