Comparison
Delaware C-Corp vs LLC
Choosing between a Delaware C-Corp and an LLC is one of the first — and most consequential — decisions for an Indian founder incorporating in the US. Here is the CA-led comparison that matters.
Side-by-side
Quick comparison.
C-Corp vs LLC for Indian founders.
| Criterion | Delaware C-Corp | LLC |
|---|---|---|
| Best for | VC-fundable startups | Service / consulting businesses, single-member ownership |
| Taxation | 21% federal corporate tax + state. Double taxation on dividends. | Pass-through to members. No entity-level federal tax (unless elected). Single layer. |
| VC investment | Standard — VCs strongly prefer C-Corp | Difficult — VCs rarely invest in LLCs |
| Stock issuance | Common, Preferred, multiple classes — flexible cap table | Membership interests only; cap-table workarounds possible but messy |
| ESOPs / 83(b) | Standard support — ISO, NSO, restricted stock | Profits interests possible; not standard option plans |
| QSBS exclusion | Yes — Section 1202 (up to $10M gain exclusion) | No |
| Compliance | Annual franchise tax + 1120 federal return + state | Annual franchise tax + 1065 + K-1s to members |
| Best for Indian founder if | You plan to raise from US VCs, build an enterprise SaaS business, or pursue an eventual US exit | You're building a services / consulting business with no outside-equity plans |
FAQ
Common questions.
Answers to questions Indian founders ask most often about this choice.
- Should an Indian founder choose Delaware C-Corp or LLC? — For VC-fundable startups: Delaware C-Corp every time. For service / consulting businesses with no outside-equity plans: …
- Can an LLC be converted to a C-Corp later? — Yes — but it's a taxable event in most cases (treated as liquidation + new incorporation). Cost and complexity are real.…
- What's QSBS and why does it matter? — Section 1202 Qualified Small Business Stock allows founders/early investors to exclude up to $10M of gain on C-Corp stoc…
- Is LLC better for tax? — For a profitable services business with no plans to raise: yes, LLC's pass-through structure avoids double taxation. For…
- Can I have multiple owners in a Delaware C-Corp? — Yes — unlimited shareholders, including non-residents. No US tax presence is created merely by ownership. C-Corp accommo…