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A limited liability company (LLC) is a type of business entity that’s popular for small business owners who want to create a legal separation between their business and personal assets. However, a C corporation is often a better option for startup founders.
LLCs can protect the owner’s personal assets if the LLC is sued or files bankruptcy. The business’s profits and losses get passed through to the owner, unless they elect to have the LLC taxed as a C or S corporation.
For startup founders, creating a Delaware C corp often makes more sense than registering an LLC. Offering equity to new hires can be easier with a C corp, and venture capital funds may be prohibited or prefer not to invest in LLCs or S corporations.
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