Choice of entity is made once, quickly, and shapes every later dispute.

Governance flexibility. An LLC is a creature of contract; the operating agreement can allocate control, economics and duties almost freely, and can modify default fiduciary duties in many states. A corporation is more rigid: statutory roles, board, officers, shareholder meetings, and duties that are harder to contract around. Flexibility is an advantage when the document is well drafted and a liability when it is not, because the defaults an LLC displaces are also the protections a member loses.

Tax. LLCs are typically pass-through by default with considerable choice available; corporations may face entity-level tax unless an election is made, and that election carries eligibility restrictions on the number and type of owners and on classes of stock. This drives most decisions in practice.

Outside investment. Institutional investors frequently expect a corporate structure with defined preferred stock, and converting later is possible but not free.

Exit and transfer. Corporate shares are conceptually simpler to transfer. LLC interests are usually restricted by default, and a transferee who is not admitted as a member receives economic rights only.

The recurring failure is treating this as a formation decision rather than a governance decision, and adopting a template operating agreement that says nothing about the questions the owners will actually argue about.