Choosing the right business structure impacts your tax responsibilities, funding options, registration requirements, and personal liability.
Learn more about choosing the right business structure at the U.S. Small Business Administration (SBA) website.
Common business structures include the following:
- Sole Proprietorship
- Partnership
- Limited Liability Company (LLC)
- C Corporation
- S Corporation
- B Corporation
- Close Corporation
- Nonprofit Corporation
- Cooperative
As outlined by the U.S. Small Business Administration, the following table provides the general traits of common business structures:
| Business Structure | Ownership | Liability | Taxes |
|---|---|---|---|
| Sole proprietorship | One person | Unlimited personal liability | Self-employment tax, personal tax |
| Partnership | Two or more people | Unlimited personal liability unless structured as a limited partnership | Self-employment tax (except for limited partners), personal tax |
| Limited liability company (LLC) | One or more people | Owners are not personally liable | Self-employment tax, personal tax, or corporate tax |
| Corporation - C corp | One or more people | Owners are not personally liable | Corporate tax |
| Corporation - S corp | One or more people, but no more than 100, and all must be U.S. citizens | Owners are not personally liable | Personal tax |
| Corporation - B corp | One or more people | Owners are not personally liable | Corporate tax |
| Corporation - Nonprofit | One or more people | Owners are not personally liable | Tax-exempt, but corporate profits can't be distributed |