Anyone have experience using an LLC/S-Corp in conjunction with a C-Corp

February 25, 2025

by a searcher from University of California, Irvine - The Paul Merage School of Business in Dana Point, CA, USA

The C-Corp adds an extra level of taxation in most cases when trying to get earnings out of the company and ultimately into your pocket. I am trying to consider all legal avenues of extracting profit with the least taxation as possible

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Reply by a searcher
from Cornell University in Chatham, NJ, USA

Yes, this is what I would recommend as well. I/We have over a dozen LLC's and 1 C-Corp for QSBS/angel investors signing SAFE note, and you can do B2B transactions between entities which would be just expense deduction on C-Corp and income on LLC so it would be single tax, but based on rest of your income and S-Corp status, might trigger some or lot of FICA so need weigh whether it's worth it. Also be sure expenses are at market rates so they are defendable. I also use one of the LLC's to pay my kids from the C-Corp to family LLC to my kids. I do like the C-Corp too cause it lets me control when to pull the money out and sometimes ill leave it in there for a couple years to time taxes vs LLC which automatically forces me to recognize all income. Also with corp tax at 21%, and maybe going down, worth balancing what side to pay the tax on. Coupled with a short term rental and material participation in an LLC with losses, you might be able to offset the dividend income potentially on your###-###-#### All the tools in the toolbox, use them as it makes sense but definitely get tax counsel advice! (this is not legal or tax advice).

Reply by an investor
from University of Illinois at Urbana in Chicago, IL, USA

Thanks ^redacted‌ - As with most other responses I would say this is a super broad question, and really a question for your attorneys to understand the differences in structure and goals of transaction, etc. I have used all sorts of diff forms of entities, and there are attorneys who get paid a LOT of $$$$ who can structure things I never thought possible (e.g. tax free roll over of LLC shares into a new entity). But that kind of expertise is outside the scope of most deals - and certainly most deals contemplated on this site. Suggest doing some recon on ChatGPT or the like, and then talking to your counsel, seller's counsel and tax people, etc.

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