LLC or corporation? What you need to know before starting a U.S. business

Starting a U.S. business comes with plenty of decisions, and one of the most critical first steps is choosing the right business structure: an LLC or a corporation.

There’s no one-size-fits-all answer. The right choice depends on how you plan to own and operate your business, whether you expect to bring in investors, how you plan to grow, and how the business will be taxed. Where you plan to operate can also factor into the decision.

In this guide, we’ll break down the key differences between LLCs and corporations, walk through what it takes to get your business up and running, and cover some of the practical steps to think about once your company is formed—including establishing a reliable U.S. business address and managing your business mail.

LLC vs. corporation: What’s the difference?

You’ve decided to start a U.S. business. Now, you’ll need to figure out what type of entity makes sense for you.

LLCs and corporations can both provide liability protection and create a separate legal structure for your business, but the key differences between an LLC and an corporation are in how they're owned, managed, taxed, and operated.

Let's take a quick closer look at each business entity option.

LLC: A flexible choice for businesses

An LLC is a business structure created under state law. The owners of an LLC are called members, and an LLC can have one member or multiple members.

Here are a few things to know about LLCs:

• Flexible ownership: An LLC can have a single owner or multiple members, and its ownership structure can be adapted to the needs of the business.
• Simpler management: LLCs generally have fewer formalities than corporations, although specific requirements vary by state.
• Flexible tax treatment: An LLC doesn't have one fixed federal tax classification. Depending on the number of owners and elections made with the IRS, an LLC may be taxed as a disregarded entity, partnership, or corporation.
• Liability protection: An LLC generally separates the business from its owners, which can help protect members from personal liability for the company's debts and obligations, subject to applicable laws and exceptions.

An LLC can be a good fit for entrepreneurs who want a relatively straightforward business structure without some of the formalities associated with corporations. It may make sense for a solo consultant, agency owner, e-commerce entrepreneur, professional service provider, or other business owner who values flexibility in how the company is managed and taxed.

That said, tax treatment can vary significantly depending on the business and its owners, particularly for non-U.S. entrepreneurs. If you're unsure how an LLC would be taxed in your situation, it's worth talking with a qualified tax professional before making your decision.

Corporation: A structured option for growing businesses

A corporation is a separate legal entity owned by shareholders. Instead of members, corporations have shareholders who own shares of the company.

Compared with an LLC, a corporation generally follows a more formal ownership and management structure. That can be helpful for businesses that expect to bring in outside investors, issue shares, or build a company with a more regimented approach to governance.

Corporations typically have additional formalities to maintain, which can include adopting bylaws, issuing stock, keeping corporate records, and following requirements for shareholder and director meetings. The exact requirements depend on the state and type of corporation.

A corporation may be worth considering if you're:

• Building a company with plans to raise outside capital.
• Expecting to issue shares to investors or employees.
• Planning for a more formal ownership and management structure.
• Building a startup that may eventually seek significant outside investment.
• Comfortable with the additional administrative requirements that come with a corporate structure.

Tax treatment is another important consideration. A traditional C corporation is generally taxed separately from its owners. Certain corporations may qualify to elect S corporation treatment, which has different tax rules and eligibility requirements.

LLC vs. corporation at a glance

If you're deciding between an LLC and a corporation, think beyond how you want your business to look today. Consider how you expect to fund the company, who will own it, how involved you want to be in its management, and where you see the business going in the future.

Note: Tax, legal, ownership, and filing requirements vary based on the business, state, owners, and elections made. This article is for general informational purposes and isn't legal or tax advice. Consult qualified professionals when deciding which structure is appropriate for your business.

Forming your U.S. business with doola

Once you've settled on a business structure, it's time to turn that decision into an actual company. There are state filings to think about, business documents to prepare, registered agent requirements to understand, and ongoing responsibilities to keep track of.

Form your company: Start your U.S. LLC/Corp with doola →
Get your U.S. address & lease: Secure a bank-compliant address with VPM→

If you've never formed a U.S. business before, the process can feel a little overwhelming. The good news? doola can make the business formation process a whole lot easier

Doola helps you start and manage U.S. businesses from anywhere in the world, faster. Whether you're forming an LLC or corporation, doola can help guide you through the formation process and take care of important administrative steps along the way.

Depending on the business and service you choose, doola can help with things like:

• Forming your LLC or corporation and handling the necessary state filings.
• Preparing essential business documents to help get your company established such as your EIN.
• Providing registered agent services to help you meet your business's operational state compliance of registered agent requirements.
• Keeping your business organized with ongoing business-management services of bookkeeping and taxes.

For someone who's already juggling a business idea, customers, finances, and everything else that comes with being an entrepreneur, having a partner handle the formation and after formation processes can make getting started much less daunting.

It's particularly helpful for non-U.S. entrepreneurs and remote business owners who may not have an existing U.S. business presence—or simply don't want to navigate the U.S. formation process on their own.

Once your company is formed, you'll have another important piece of the puzzle to figure out: where your business will receive its mail and what address you'll use for your business needs.

Ready to choose your business structure? Explore business formation with doola.

Managing your business mail and accounts with a virtual address

One of the other important things to think about is where your business will receive mail and what address you'll use for business-related purposes during formation of your entity. Once you know what kind of address your business needs, the next question is simple: how are you actually going to manage it?

That’s where trusted partner VirtualPostMail (VPM) fits into the picture. VPM provides a U.S. virtual address along with the tools you need to receive and manage your business mail remotely. You can keep one consistent U.S. address while managing everything online.

Your business will need a consistent address for receiving important documents, communicating with vendors, maintaining certain accounts, and handling other day-to-day business needs. And if you're running your company remotely, traveling frequently, or living outside the U.S., having a reliable place for that mail to go becomes even more important.

A business address can help you:

• Receive business mail and important documents without relying on a temporary location.
• Keep business correspondence separate from your personal address.
• Manage mail associated with certain business accounts.
• Provide an address to banks, payment providers, marketplaces, vendors, and other services when permitted by their requirements.
• Give customers and vendors a consistent business location.
• Keep receiving and managing mail while you're traveling or living outside the U.S..

For remote entrepreneurs, this can make a big difference. Your physical location might change from month to month, but your business still needs a dependable place to receive important correspondence.

Opening and maintaining your U.S. business bank accounts

VPM's TruLease helps newly formed businesses establish a physical commercial address to support business operations after forming an LLC or corporation. Through a one-year lease agreement in the business’s name, customers can access a real office or suite address for business address verification, banking, merchant account applications, and other business needs where physical address documentation is required.

TruLease also includes virtual mailbox services, allowing business owners to receive, digitize, and manage mail remotely, with an optional utility bill available to support address documentation needs.

In short: TruLease bridges the gap between forming a business and establishing its physical business presence, combining commercial office leasing, address documentation, and digital mail management in one solution.

Finding the right type of address for your business

You’ve probably noticed there are plenty of address options marketed to remote entrepreneurs starting a U.S. business. But not every type of address serves the same purpose.

The right choice depends on what you actually need your address to do:

• A PO Box is designed primarily for receiving mail through the postal service. It can work for basic mailing needs, but it does not represent a physical business location. LLC and corporations do not accept PO Box addresses.
• A virtual mailbox or CMRA address gives you a street address where mail can be received and managed remotely. It’s a convenient option if you need a consistent mailing address without maintaining an office. However, some business banks, payment providers, and other services may have specific rules about accepting CMRA addresses.
• A commercial office address is associated with an actual commercial property and can be useful when your business needs a physical commercial location often for compliance requirements for financial institutions. This may include a lease, utility bill, or other documentation connecting your business to the location.

So, which one do you need?

If your main priority is receiving and managing business mail remotely, a virtual mailbox may be sufficient.

If a bank, payment provider, or another business process requires a physical commercial location and supporting documentation, you’ll want to look for an address solution specifically designed for that purpose, such as TruLease.

With VPM, you can choose from available U.S. address locations with each service and establish a consistent address for your company.

Starting a U.S. business checklist

• ☐ Choose your business structure: Decide whether an LLC or corporation is the right fit for your business.
  
• ☐ Form your company: Work with doola to establish your LLC or corporation and take care of key formation requirements.
  
• ☐ Set up your U.S. business address: Choose a business address that fits your business needs, whether you need a reliable address for correspondence or a commercial address with supporting documentation.
  
• ☐ Set up online mail management: Use a mailbox address to receive, scan, forward, and manage your business mail remotely.
  
• ☐ Get your EIN: Apply for an Employer Identification Number (EIN) with the IRS for tax and banking purposes.
  
• ☐ Open your business accounts: Set up business banking and other accounts using your company information and address as required using TruLease through doola.

Whether you’re starting your first company, building a business from outside the U.S., or running your company while constantly on the move, having these pieces in place can make the process feel a lot more manageable.

Build your U.S. business with the right tools in place

Choosing between an LLC and corporation is only the beginning of setting up your U.S. business.

You also need the practical pieces that help your company operate day to day—from forming the business and maintaining your registered agent services to establishing a reliable U.S. address and keeping up with business mail.

That’s where doola and VPM can work together. doola can help you form and manage your U.S. business, while VPM gives you a way to establish a U.S. business address and manage your mail and business bank accounts remotely.