Similarities between C corporations and LLCs include:

• Both C corporations and LLCs give shareholders limited liability protection for shareholders. This allows them to separate themselves from the business and not be responsible for (the business's) debts and other liabilities incurred by their business.
• Both C corporations and LLCs are independent legal entities, which are formed by filing the required paperwork with the State.
• Both C corporations and LLCs have flexibility when it comes to who owns the company. Stockholders do not have to be US residents, there can be an unlimited number of stockholders, and both can be owned by any individual or business.
• Both C corporations and LLCs can have different stock classes.

Differences between C corporations and LLCs include:

Taxation

• A C corporation is completely separated from its owners and shareholders. Since C corporations are taxed on their profits, before their shareholders receive any money and since the shareholders must also pay their own personal taxes, those within a C corporation may be double-taxed on the same money. This is only a problem when shareholders receive payments in the form of dividends.
• An LLC is not completely separated from its owners and shareholders. An S corporation is not required to pay Federal taxes, so all of its profit goes directly it its shareholders. The shareholders are then taxed on a personal level. This eliminates the double-taxation scenario seen with a C corporation.

Formalities

• C Corporations must implement extensive internal formalities. These include instituting bylaws, issuing stock, calling the first meeting of shareholders and directors and continuously calling for annual meetings. C Corps are also required to record the minutes of these meetings.
• LLCs perform menial internal formalities. They are instructed to implement an agreement of operation, issue shares to members and document mandatory annual meetings to be attended by managers and members. They must also document big decisions implemented on behalf of the entity.

Management

• LLC management may be performed by members, very similar to a partnership management. Management may also be performed by managers very similar to the management of a corporation, since the members do not participate in the day to day decision making process.
• C corporations utilize officers and directors. The corporation's business is directed by a board which handles all the big decisions. This board of directors elects officers to handle the corporation's daily business.
• C corporations have an infinite existence, but an LLC usually has a measured time of existence. Most states' laws demand a date for dissolution be listed in the Articles of Organization. The death or resignation of a member can initiate the dissolution of an LLC.

Interest Transferability

• In an LLC, an owner usually must gain the approval of the other members before a transfer can be made.
• C corporation stock can be transferred easily, without approval from other shareholders.

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