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If you plan on taking the money out of the company immediately, the LLC/S-Corp is better because the company doesn't pay any tax on that income – it "passes through" to the members as regular income. Therefore, it's only taxed one time. With a C-Corp, the corporation pays taxes on its income for the year, and any money paid out to the shareholder is taxed at 15%. Thus, the actual earnings of the corporation are subjected to double taxation, which the LLC/S-Corp can avoid. The potential problem with an LLC that he's referring to is that LLC members are taxed on their share of annual income, whether or not it is actually distributed out.

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