LLC vs S-Corp vs C-Corp: Which Should You Form? (Costs + All 50 States)

Choosing between an LLC, an S-corp and a C-corp is the first tax decision most business owners ever make, and it is usually made with the least information. The structure you pick decides how you pay yourself, what you pay in self-employment tax, and what options you have later. Here is the plain-English version, and what each one actually costs to set up.

LLC: the default for a reason

A single-member LLC gives you liability protection with almost no extra tax complexity. Profits flow to your personal return on Schedule C. You pay income tax plus self-employment tax on the full profit, about 15.3% on top of income tax, which is the number that eventually pushes people toward an S-corp.

An LLC is usually right when you are starting out, income is still variable, or you want the simplest possible structure that still protects your personal assets.

S-corp: where the tax savings live

An S-corp is not really a different entity, it is a tax election, usually made by an LLC filing Form 2553. The owner becomes an employee, takes a documented reasonable salary, and takes the rest as distributions that are not subject to self-employment tax.

That split is the whole game. At roughly $60,000 to $80,000 of consistent profit, the savings usually outrun the added cost of payroll and a corporate return. Below that, the overhead often eats the benefit, and an honest advisor will tell you so.

C-corp: for a specific kind of business

A C-corp pays its own tax at a flat 21%, and owners are taxed again on dividends. Double taxation makes it wrong for most small businesses, but right for a specific few: companies raising venture capital, planning to retain significant earnings, or building toward Qualified Small Business Stock treatment, where up to $10 million of gain can potentially be excluded at exit.

What it costs, in plain numbers

• LLC formation: $750 flat — state filing, EIN, and the structure set up for tax from day one. Start your LLC here.

• S-corp setup and election: $1,250 flat — entity setup, the 2553 election, reasonable compensation guidance, and payroll timing. Start your S-corp here.

• Not sure which fits? Book a free 15-minute call and we will tell you honestly, including when the answer is to keep what you have.

State filing fees are separate and vary by state, from about $50 to a few hundred dollars, and we tell you the exact number for your state before anything is filed.

The part most formation services skip

A filing mill can create an LLC in any state for a few dollars. What it cannot do is answer the questions that decide what you actually pay: which state to form in, whether the S-election makes sense at your numbers, what your reasonable compensation should be, and how the structure interacts with the QBI deduction and your retirement plan.

At All State Tax Resolution the person setting up your entity is a licensed Enrolled Agent, credentialed directly by the IRS and able to represent you in all 50 states. The structure gets built for tax, not just for paperwork.

We form entities in all 50 states

Wyoming, Delaware, Texas, Florida, California and everywhere else, including the state-specific traps: California's $800 annual franchise tax, New York's publication requirement, Texas franchise reports. Where you live and where you form are separate questions, and forming in the wrong state is one of the most common expensive mistakes we clean up.

Ready to start, or want the honest read on your situation first? See our business formation services or book a free 15-minute call. Call or text (323) 900-0305.

Tax savings depend on your specific facts; no outcome is guaranteed. General information, not individual tax advice. Confidential per IRC Section 7216.

Colombian founders weighing this exact choice should also read US LLCs for Colombian Founders in Bogotá: Delaware, Wyoming & US Payments