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Limited Liability Company (LLC)
Corporation (S corp or C corp)
Nonprofit (501c3)
Doing Business As (DBA)
All business types at a glance
Limited Liability Company (LLC)
Going solo or teaming up? Make sure you're not personally on the hook for business liabilities with an LLC.
Ready to get your LLC?
Corporation (S corp or C corp)
Plan to issue shares, go public, or go global? Go further as a corporation.
Best if you plan to go public one day; can issue shares to founders, employees, and investors (C corp)
Unlimited owners (aka "shareholders") allowed (C corp)
Avoids double taxation on profits (S corp)
Recognized internationally and preferred by investors
Taxed twice if it's a C corporation—business pays at the corporate level, and shareholders pay on income received
Avoids double taxation if it's an S corporation
Less management flexibility; must have a board of directors
More admin; strict rules about holding meetings and keeping records
Ready to get your Corporation?
Nonprofit
Create an organization to give back and be eligible for tax breaks.
Best if you’re organizing for a good cause rather than for profit
Unlimited owners (aka "shareholders") allowed
Eligible for tax exemption with 501(c)(3) status
Tax exempt from federal income taxes with 501(c)(3) status
Less management flexibility; must have a board of directors
More admin; strict rules about holding meetings and keeping records
Ready to get your Nonprofit?
Doing Business As (DBA)
Get a business name for your sole prop without forming a legal entity, or add a new name to an existing entity.
Best if you want an official business name, but want to avoid the upkeep needed for LLCs or corporations.
Not an actual legal entity type
You're personally on the hook for business liabilities
Taxed just once if your business is classified as a sole proprietorship or partnership—you pay on profits in your personal tax return
No personal liability protection
Ready to get your DBA?
Frequently asked questions
What's the difference between an LLC and a corporation?
Both protect owners so they're not personally on the hook for business liabilities or debts. But, key differences include how they're owned (LLCs have one or more individual owners and corporations have shareholders) and maintained (corporations generally have more formal record-keeping and reporting requirements). Even though LLCs are considered easier to start and maintain, investors tend to prefer corporations.
What's the difference between a C corporation and an S corporation?
The way you're taxed. C corporation income is taxed twice—the business pays taxes on its net income, and then the shareholders also pay taxes on the profits they receive. With S corporation income, only the shareholders pay taxes on profits received. The Secretary of State requires articles of incorporation to form a corporation.
What's the main difference between a sole proprietorship and an LLC?
Personal liability protection. An LLC protects owners from being personally on the hook for business liabilities or debts. A sole proprietorship doesn't.
How are different business types taxed?
LLCs, S corporations, and sole proprietorships are taxed once on profits received. C corporations are taxed twice; the business pays taxes at the corporate level, and shareholders pay taxes on income received.
Which business types give me personal liability protection?
LLCs and corporations. You don't get personal liability protection with sole proprietorships or DBAs.
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