Business Entity Selection
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The business structure you choose effects everything from daily operations, to taxes, to how much of your personal assets are at risk. You should choose a business structure that gives you the right balance of legal protections and benefits.
Comparison of the most popular business structure and characteristics, but always remember that ownership rules, liability, taxes, and filing requirements for each business structure most likely will vary by state.
|Sole proprietorship||One person||Unlimited personal liability||Personal tax only|
|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 distribute|