Compare business types

Choose the right one and set your company on the right track. Click the entities you want to compare, or scroll down to see all your options.

LLC
C Corporation
S Corporation
Nonprofit
Sole Proprietorship
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Entity Type
Entity Type & Summary
Liability & Taxation
Key Considerations
LLC Get started
Summary
  • Flexible, offers liability protection, great for new businesses
  • Unlimited number of members allowed
  • Separate legal entity, filing required with the state
Liability & Taxation
  • You have liability protection and tax flexibility
  • Allows you to add members to raise money for your business
Key Considerations
  • Not the right choice for companies who plan to go public and/or do business internationally
  • Limited admin upkeep
Get started
C Corporation Get started
Summary
  • Great if you plan to go public or international
  • Unlimited number of shareholders allowed
  • Separate legal entity, filing required with the state
Liability & Taxation
  • You have liability protection, and it's the preferred structure if you want to secure funds from outside investors, go public, and/or go international
  • Shareholders can buy an interest in the business
  • Subject to double taxation
Key Considerations
  • Not flexible
  • A lot of admin upkeep
  • Ongoing need to provide additional documentation
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S Corporation Get started
Summary
  • The choice of smaller corporations
  • Up to 100 shareholders allowed
  • Separate legal entity, filing required with the state
Liability & Taxation
  • An S Corp has only one level of taxation
  • Shareholders must be US citizens
  • The corporation can only have one class of stock
Key Considerations
  • Not flexible
  • Not suitable if you plan to go public or do business internationally
  • A lot of admin upkeep
  • Ongoing need to provide additional documentation
Get started
Nonprofit Get started
Summary
  • Allows you to build awareness, and support a cause that matters to you
  • No individual ownership
  • Separate legal entity, filing required with the state*
Liability & Taxation
  • Often no income tax
  • You can raise money for your cause (those contributions can be tax deductible!)
Key Considerations
  • Filing and application fees are higher
  • Reporting requirements are more substantial
  • More admin requirements
Get started
Sole Proprietorship Get started
Summary
  • Easy, but a bit risky. Best to file for a DBA
  • One owner; no filing requirement
Liability & Taxation
  • No liability protection
  • Easy set-up, no need to file any paperwork, no separate tax returns
Key Considerations
  • You're the only investor (help from friends and family is optional!)
Get started
*In order to be tax-exempt, additional filings are required directly with the IRS.
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Frequently asked questions

Do I need to form an LLC, corporation, or nonprofit to start my business?

No, but you might want to. Forming an LLC, a corporation, or a nonprofit protects your personal assets and may unlock tax benefits.

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.

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. Key differences include how they're owned (LLCs have one or more individual members 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. Learn more

Can an LLC be taxed as an S corporation?

Yes. This can be helpful for business owners who want the management flexibility of an LLC—but also want to minimize employment taxes on the profits they receive.

Do I need a Doing Business As (DBA) name?

If you plan on using a business name that's different from your personal or official company name, you're required to get a DBA in most states or counties. Learn more

Do I need a business license or permit to get started?

Depending on the nature of your business, and where it's located, you might need a license or permit to operate legally within your county or state.