Once you've decided to set up a US entity, the next question is which structure to use. Here's a breakdown of the three most commonly compared options — LLC, C-Corp, and S-Corp — and their tradeoffs.
LLC (Limited Liability Company) — the most common choice
An LLC is relatively simple to form and maintain, and it separates personal assets from business liability. Taxation is flexible: by default it's taxed as a pass-through entity (Form 1065 for multi-member LLCs), but it can elect to be taxed as a corporation via a check-the-box election if that's advantageous.
Pros: Simpler formation and ongoing compliance, fewer formal requirements like a board of directors or annual shareholder meetings. No restrictions on foreign individuals or entities (including Korean owners) holding membership interests.
Cons: If you're planning to raise venture capital, an LLC structure can be a disadvantage — most US VCs strongly prefer C-Corps, and specifically Delaware C-Corps.
C-Corp (C Corporation) — built for fundraising
A C-Corp is taxed as a separate entity (corporate tax return, Form 1120). Shareholders who receive dividends are taxed again on that income — the so-called "double taxation" structure C-Corps are known for.
Pros: Can freely issue stock, and it's the structure investors and VCs are most familiar and comfortable with. No restrictions on the number or nationality of shareholders, so foreign shareholders can participate freely.
Cons: Double taxation, plus more corporate formalities to maintain (board of directors, shareholder meetings, bylaws) than an LLC.
S-Corp (S Corporation) — usually not actually available to Korean owners
An S-Corp is a hybrid: it keeps the "Corporation" legal form of a C-Corp but is taxed as a pass-through entity like an LLC. There's an important restriction, though.
The key restriction: to elect S-Corp status, shareholders must be US citizens or US tax residents. Foreign corporations and non-resident aliens cannot be S-Corp shareholders (IRC §1361(b)(1)(C)). In practice, this means if a Korean individual or Korean company directly holds shares, S-Corp status typically isn't an available option in the first place.
So which one do Korean sellers/brands usually pick?
If there's no plan to raise US venture capital and the business is centered on Amazon selling or smaller-scale retail, an LLC is often chosen for its simpler process. If the plan includes raising VC funding or eventually going public, many founders incorporate as a Delaware C-Corp from the start. S-Corp is effectively off the table for most structures where Korean individuals or entities hold shares directly, due to the foreign-shareholder restriction described above.
Key takeaway
LLCs are simple to run and place no restrictions on foreign ownership, making them a common choice for smaller operations. C-Corps carry double taxation but are the structure investors expect. S-Corps require shareholders to be US citizens or residents, which rules them out for most structures where Korean individuals or entities hold shares directly.