How are C Corps taxed differently than S Corps and LLCs?

C Corps are taxed on gross income minus operating expenses at the entity level. Individual shareholders like founders and investors then pay taxes only on the dividends they receive. Individual shareholders at S Corps and LLC’s, on the other hand, are taxed on their share of the business’s profit, regardless if they were paid a distribution or not. Investor-friendly taxation is a primary reason most VCs and institutional investors only invest in C Corp startups.