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Guide
LLC or C Corporation: what changes in practice.
Two structures cover almost every online business. The right one depends on how you plan to grow, and the decision is yours.
| LLC | C Corporation | |
|---|---|---|
| Best suited to | Stores run by one or a few owners | Brands that plan to raise investment |
| Owners | Members, with flexible ownership | Shareholders, with shares and classes of stock |
| Open to non-US owners | Yes | Yes |
| Federal income tax | Pass-through by default: the owners are taxed, not the company | The corporation pays tax on its profits, currently 21%; dividends are taxed separately |
| Formalities | Few: an operating agreement, yearly state and federal filings | More: bylaws, a board, shareholder records, its own tax return |
| Investors | Possible, but venture funds rarely invest in LLCs | The standard structure for venture capital |
| Typical state | Wyoming, New Mexico, Delaware | Delaware |
Three questions that settle it.
Will you raise venture capital?
If yes, start with a C Corporation. If you are not sure, an LLC can usually be converted later.
How many owners?
An LLC handles one owner or a few partners with very little paperwork.
How much upkeep do you want?
An LLC has fewer recurring formalities. A corporation asks for more record-keeping.
What about an S Corporation?
Why Atiko does not offer S Corporations to owners abroad
An S Corporation is a tax status, and it is only open to companies whose shareholders are all US citizens or US residents. If you live outside the United States, it is not available to you.
This page is general information, last reviewed in October 2026. It is not legal or tax advice and may not reflect the latest rules in every state. Atiko is not a law firm or an accounting firm. Please consult a licensed attorney or tax adviser about your own situation.
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Framework
How to think about a legal structure
A legal structure answers five questions about a business. The first is liability, meaning whether the owners’ personal assets are separate from the company’s debts. All the structures on this page are limited liability entities, so in normal circumstances the company is responsible for its own obligations. The differences between them lie mostly in the other four questions.
The second question is ownership, which covers who can hold a stake and how it is recorded and transferred. An LLC has members and a flexible operating agreement. A corporation or a limited company has shares, which makes it simpler to issue different classes and to bring in new holders. The third question is tax treatment. Some structures pay tax at company level, and others pass their profits through to the owners.
The fourth question is formalities, such as directors, officers, a company secretary, bylaws, annual accounts or an audit. More formality means more administration each year and a more familiar structure for outside parties. The fifth is investors. Venture capital funds usually expect a particular form, most often a Delaware C Corporation in the United States. A founder who plans to raise capital weighs that expectation from the beginning.
Structures
Six structures founders commonly consider
US LLC
Commonly chosen by solo founders and small teams who want limited liability, few formalities and pass-through taxation by default. Non-US residents can own one without a visa or a Social Security number.
US C Corporation
Commonly chosen by founders who plan to raise venture capital or issue shares to employees. It pays federal corporate income tax, currently a flat 21%, and dividends are taxed separately.
US S Corporation
A tax election made on Form 2553, limited to 100 shareholders who must be US citizens or residents. It is therefore generally unavailable to companies with non-resident owners.
UK Ltd
Commonly chosen by founders selling to British and European customers who want a widely recognized company form. It needs one director who is a natural person, one shareholder and a UK registered office.
UK LLP
A partnership with limited liability that requires at least two members, with profits taxed in the hands of the members. It is more often chosen by professional partnerships than by online stores.
Hong Kong Ltd
Commonly chosen by founders who source from Asia or sell across the region. It needs one natural-person director, one shareholder, a Hong Kong company secretary and a registered office.
Comparison
Three common choices side by side
| US LLC | UK Ltd | Hong Kong Ltd | |
|---|---|---|---|
| Registered with | The state you choose | Companies House | Companies Registry |
| Owners and managers | Members, with an operating agreement | Shareholders and at least one director | Shareholders and at least one director |
| Residency requirement | None for owners | None for directors or shareholders | None for directors or shareholders |
| Local requirement | Registered agent in the state | UK registered office and registered email | Hong Kong company secretary and registered office |
| Tax at company level | Pass-through by default | Corporation tax, main rate currently 25% | Profits tax on a territorial basis, standard rate 16.5% |
| Consumption tax | State sales tax where nexus exists | VAT, handled separately | No VAT or sales tax |
| Yearly filings | State report or tax, plus federal filings | Confirmation statement, accounts, Company Tax Return | Annual return, renewal, audit, profits tax return |
The UK small-profits rate is 19%, and Hong Kong applies 8.25% to the first HK$2 million of profits under its two-tier regime.
Reflection
Questions founders ask themselves
These questions are offered as points to consider. They do not replace advice from a licensed professional who knows your situation.
Where are my customers and in which currency do they pay?
A company in the market where you sell is often more familiar to customers, banks and payment providers there. Founders usually start from where their revenue comes from and work back to the structure.
Do I plan to raise outside capital?
Investors tend to expect a share-based company in a jurisdiction they know. Founders who foresee a funding round often consider whether the structure they choose today would have to be converted later.
How many owners will there be, and where do they live?
The number and residence of the owners determine which structures are available at all. An S Corporation, for instance, is closed to non-resident shareholders, and an LLP needs at least two members.
How does my country of residence tax foreign company income?
The tax position of the company is only half the picture. How you are taxed personally depends on the rules where you live, which is a question for a licensed tax adviser in that country.
How much yearly administration am I prepared for?
Some structures require accounts, an audit or several annual filings, each with a cost and a deadline. Founders compare these recurring obligations as carefully as the cost of formation.
Where will my inventory and suppliers be?
Stock held in a warehouse can create tax obligations in that place, and supplier relationships can make one jurisdiction more practical than another. The physical flow of goods is part of the choice.
The decision is yours
Atiko explains what each structure involves administratively and files the one you choose. It does not give legal or tax advice. Before deciding, consult a licensed lawyer or tax adviser, in particular one who knows the rules of your country of residence.
Questions about business structures
Can a non-US resident own a US LLC or C Corporation?
Yes. Non-US residents can own either, with no visa and no Social Security number, and the company is filed remotely with a state. The S Corporation election is the exception, since its shareholders must be US citizens or residents.
What is the practical difference between an LLC and a C Corporation?
An LLC has members and an operating agreement, few formalities and pass-through taxation by default. A C Corporation has shareholders, directors, officers and bylaws, pays federal corporate income tax and is the standard form for venture capital. Which one suits a business depends on its owners and plans.
Does a foreign-owned LLC have federal filings even with no US tax due?
Generally, yes. A foreign-owned single-member LLC must generally file Form 5472 with a pro forma Form 1120 every year, and the penalty for not filing starts at $25,000. An independent licensed tax professional prepares this filing.
Why is Delaware so often mentioned for C Corporations?
Delaware is the usual state for C Corporations that intend to raise venture capital, because investors and their lawyers are familiar with its corporate law. Other states are also used, and the choice of state is a separate decision from the choice of structure.
Does a UK or Hong Kong company need a local director?
No. Both require at least one director who is a natural person and at least one shareholder, and neither needs to live there. The United Kingdom requires a registered office address in the UK, and Hong Kong requires a local company secretary and a registered office.
Can I change structure later?
In many cases a company can be converted, or a new company can be formed and the business moved into it. Such a change involves filings, costs and often tax consequences, so founders usually seek legal and tax advice before making it.
Is a Hong Kong company tax-free if I sell outside Hong Kong?
Hong Kong taxes profits arising in or derived from Hong Kong, which is known as a territorial basis. Whether particular profits fall outside that scope is a question of fact assessed by the Inland Revenue Department, and the company still files a profits tax return and audited financial statements. A licensed professional should assess your case.
Does Atiko choose the structure for me?
No. We describe what each structure requires in filings, local presence, yearly obligations and cost, and we answer administrative questions about them. You make the decision, ideally after consulting a licensed adviser, and we then prepare and file it.
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