Disclaimer: I'm not a lawyer, this is not legal advice. Most of this stuff I've read through Nolo publications and other books and the rest I heard while talkin

Disclaimer: I'm not a lawyer, this is not legal advice. Most of this stuff I've read through Nolo publications and other books and the rest I heard while talking to people, so check with your own lawyer. (3) S-Corp like a C-Corp requires you to act in ways demonstrating that the corporation is a separate business entity, with its own agenda. If it can be demonstrated in court that you are mixing your personal assets in with your corp, then the court can decide that you no longer receive the liability protection of the corporation. This means doing things such as having formal meetings of the board of directors, keeping minutes, having resolutions for the major business decisions (even if it is affirming the "actions of an employee"). LLCs, on the other hand, from the last I've read of them, do not have the case history saying how much formality is required. According to Nolo's book, you're better off running it in the same kind of formality as a corporation, just in case. One thing LLCs can do well, is that they are meant to offer the same kinds of liability protection as LLPs (limited liability partnerships), which can be often stronger than a corporation. But it depends on how you set up the LLC's operating agreement. (4) There are more limits to shareholders than just 100 shareholders for an S-Corp. The shareholders must be US Citizens, and a natural person. In other words, if you have a VC fund or an Angel investing money in from their business entity, you will have to convert the S-Corp to a C-Corp. LLCs may not have the shareholder limits, but selling membership interests over a certain number will trigger SEC regulations -- the same as shopping for angel investors for a corp. (5) Caveat: distributing profits from the LLC however way you want requires some extra bookkeeping. You will have to track the tax basis of every single LLC member, and track how it changes depending on money disbursed or put back into the LLC. There should also be clauses documenting how this works in the operating agreement. It is something you'll definitely want to ask your tax lawyer or accountant about. As far as I know, this feature was inherited from the LLP. It lets you defend the assets held by the entity by starving out creditors -- you have to pay taxes (assuming the LLC elected pass-through taxing instead of corp taxing) on the profits regardless of how much is actually disbursed. But to reiterate: I'm not a lawyer, this is not legal advice. Most of this stuff I've read through Nolo publications and other books, so check with your own lawyer.