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 

 

 

Steps to Starting a Business

1. Conduct Market Research

2. Develop a Business Plan

3. Choose a Business Structure

4. Register Your Business

5. Obtain Business License and Permits

6. Choose the Right Location

7. Finance and Incentives

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