Quick Comparison: LLC vs. C-Corporation The entities are taxed differently. By default an LLC is a pass-through tax entity, meaning that the income is not taxed at the company level (however, a Multi-Member LLC is still required to complete a separate tax return). The income or loss as shown on this return is 'passed through' the business entity to the individual members, and is reported on their individual tax returns. C-Corporation is a separately taxable entity, and pays tax on the income prior to any dividend distributions to shareholders...