What It Is: A business owned and run by one person, with no legal distinction between the owner and the business.
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Cons:
What It Is: A business owned by two or more people sharing profits, losses, and liabilities.
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What It Is: Combines the liability protection of a corporation with the simplicity of a sole proprietorship.
Pros:
Cons:
Costs more to establish than a sole proprietorship.
Additional paperwork compared to simpler structures.
What It Is: A special type of corporation that avoids double taxation by passing income, losses, and deductions to shareholders.
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Cons:
What It Is: A separate legal entity that offers the highest level of liability protection and unlimited growth potential.
Pros:
Unlimited growth potential.
Strong liability protection.
Cons:
Double taxation.
High costs and administrative complexity.
What It Is: A legal entity organized for a public or charitable purpose, eligible for tax-exempt status under IRS Section 501(c)(3).
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Cons:
Choosing the right structure depends on your business goals, risk tolerance, and growth plans. Use this simple decision-making guide to help:
Questions to Ask Yourself:
Are you the only owner? (If yes, consider Sole Proprietorship or LLC.)
Do you need liability protection? (If yes, consider LLC, S-Corp, or C-Corp.)
Do you plan to hire employees or raise investment? (If yes, consider C-Corp or S-Corp.)
Tax Structure Visualization
Once you've figured out which tax structure works best for you, here are 4 simple steps to register your business.
