Free tool
LLC vs C corp vs DBA
Five questions decide which US business structure fits: whether you will raise money, who owns it, what happens to profits, how much risk it carries, and where you live. The answer updates as you click.
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DBA vs LLC vs C corporation, side by side
| Sole prop + DBA | LLC | C corporation | |
|---|---|---|---|
| What it is | Your own name or trade name; you are the business | A separate legal company owned by members | A separate legal company owned by shareholders |
| Personal liability | Unlimited: your own assets are exposed | Limited to what you put in | Limited to what you put in |
| Federal tax | On your personal return | Pass-through by default: taxed once, on the owners | 21% corporate tax, then tax on dividends |
| Owners | One person | One or more, any nationality | Any number, any nationality |
| Raising investment | Not possible | Possible but unusual; investors prefer corporations | Standard: preferred stock, SAFEs, option pools |
| Paperwork | Minimal | Light: annual report, operating agreement | Heavier: board, minutes, bylaws, stock ledger |
| For non-US founders | Not practical on its own | The usual choice without investors | The choice when raising venture money |
| StartGlobal formation | Not offered | $399, state fees included | $599 Delaware, state fees included |
DBA vs LLC: a name versus a company
A DBA, also called an assumed name, fictitious name or trade name, lets you trade under a name other than your own. Registering one with your county or state is cheap and quick, and it lets you open a bank account in the business name. That is all it does. Legally and for tax, you and the business are still one person.
An LLC is a company. It owns the business, signs its contracts and holds its debts, so a lawsuit or unpaid supplier is the company's problem rather than a claim on your home or savings, as long as you keep company and personal money separate. For tax, a single-member LLC is treated like a sole proprietorship by default, so you get the protection without a second layer of tax.
The DBA makes sense for testing an idea with no customers' money at risk. Once the business signs contracts, holds stock, employs people or has clients who could claim against it, the LLC is the better tool, and it can still register a DBA for a brand name.
LLC vs C corp: who you sell shares to
Both give limited liability. The difference is ownership and tax. A C corporation issues stock, can have classes of preferred stock for investors, and can set aside an option pool for employees, which is why accelerators and venture funds ask for a Delaware C corporation. It pays a flat 21% federal tax on its profits, and shareholders pay tax again on dividends.
An LLC is owned through membership interests set out in an operating agreement. Profits pass through to the owners and are taxed once. It is cheaper to run, has fewer formalities, and suits businesses that pay out their profits: agencies, consultancies, e-commerce stores, software sold to customers rather than built for an exit.
If you are unsure, the question that decides it is whether you will sell part of the company to an investor in the next year or two. If yes, a C corporation; if no, an LLC, which can convert later.
If you live outside the United States
Non-US founders can own a US LLC or C corporation outright, with no US citizenship, residency or visa, and the company can open a US bank account and use Stripe. A DBA is not a practical route on its own, and an S corporation is not available at all, because its shareholders must be US citizens or residents.
A single-member LLC owned by a non-US person is disregarded for US tax, so the company pays no US income tax itself; whether you owe US tax depends on whether your income is effectively connected with a US business. It must file Form 5472 every year, with a $25,000 penalty for missing it. A C corporation pays 21% on its profits wherever its owners live, and dividends to you are withheld at 30% or your treaty rate.
Form your LLC for $399, or a Delaware C corp for $599
All state fees included, with a registered agent and your federal tax number. Built for founders anywhere in the world.
Frequently asked questions
What is the difference between a DBA and an LLC?
A DBA ("doing business as") is only a registered trade name. It creates no company and gives no liability protection: a sole proprietor using a DBA is personally responsible for every debt and claim. An LLC is a separate legal entity that owns the business, so its debts stay with the company. An LLC can also register a DBA if it wants to trade under another name.
Should I form an LLC or a C corporation?
Form a C corporation if you will raise equity from venture funds or angels, or want to give staff stock options. Otherwise an LLC is usually simpler and cheaper to run, and its profits are taxed once rather than at the company and again as dividends.
Can a non-US resident get a DBA?
A DBA is a name registered for a business that already exists, usually a sole proprietorship. A founder living outside the US who wants a US bank account, a federal tax number and US payment processors needs a US entity, so in practice the choice is an LLC or a corporation.
Can a non-US resident own an S corporation?
No. S corporation shareholders must be US citizens or residents. A non-US founder can own an LLC or a C corporation, with no residency or citizenship requirement for either.
How is a C corporation taxed?
The corporation pays federal corporate tax at a flat 21% on its profits, plus state corporate tax where it applies. When it pays dividends, the shareholders are taxed again; for a non-US shareholder the dividend is withheld at 30% or a lower treaty rate.
How is a single-member LLC owned by a non-US person taxed?
It is disregarded for US income tax, so the LLC pays no US income tax itself. The owner owes US tax only on income effectively connected with a US trade or business, which depends on the facts. Every year the LLC must file Form 5472 with a pro forma Form 1120; the penalty for missing it is $25,000.
Can I convert an LLC to a C corporation later?
Yes. Most states allow a statutory conversion, and an LLC can also elect to be taxed as a corporation. Founders often start as an LLC and convert before raising, but it costs fees and legal work, so if you expect to raise soon, start as a corporation.