Choose a Business Structure

Common business structures include sole proprietorship, partnership, limited liability company (LLC), and Corporation. Each structure contains its own pros and cons in relation to taxes and liabilities; these requirements can vary by state. As the business structure will affect many financial and operational aspects of your business, it is advised that you discuss these details with an attorney, accountant, or business counselor. 

SBA - Choose a business structure

Business Structure Chart

Business

Structure

Ownership

Liability

Taxes

Sole proprietorship

One person

Unlimited personal liability

Self-employment tax

Personal tax

Partnerships

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