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START YOUR LLC
✓ Name check service and reservation
✓ Articles of organization
✓ Federal Tax ID Number (EIN)
✓ Beneficial Ownership Information Report
Total value from $400
START YOUR CORP
✓ Name check service and reservation
✓ Articles of organization
✓ Federal Tax ID Number (EIN)
✓ Beneficial Ownership Information Report
Total value from $500
Comparison of Business Structures
| Business Structure | Unique Features | Protections & Taxation | Drawbacks to Consider |
|---|---|---|---|
| LLC (Limited Liability Company) | – Flexibility in management and ownership structure. – Pass-through taxation for simplicity. – Fewer formalities and requirements compared to corporations. | – Limited liability protection for owners (members). – Profits and losses pass through to members’ personal tax returns, avoiding double taxation. – Members pay self-employment taxes on earnings. | – Self-employment taxes can be higher. – Limited growth potential compared to corporations. – Not as prestigious as a corporation for some investors and partners. |
| S Corporation (S Corp) | – Pass-through taxation similar to LLCs. – Allows for up to 100 shareholders, offering growth potential. – Shareholders can be U.S. citizens or residents. | – Limited liability protection for shareholders. – Profits and losses pass through to shareholders’ personal tax returns. – Avoids double taxation. – Shareholders who work for the company must be paid a salary. | – More formalities and administrative requirements than LLCs. – Restrictions on the number and type of shareholders. – Must adhere to strict operational processes. |
| C Corporation (C Corp) | – Unlimited number of shareholders. – Ability to raise capital through stock sales. – Perpetual existence, even if ownership changes. – More credibility with investors and partners. | – Limited liability protection for shareholders. – Subject to double taxation (corporate income tax and personal income tax on dividends). – Can deduct benefits like health insurance for employees. | – Subject to double taxation. – More complex and costly to set up and maintain. – Higher administrative burdens and regulatory requirements. |
| Non-Profit Corporation | – Focus on charitable, educational, religious, or scientific purposes. – Eligible for tax-exempt status under IRS code 501(c)(3). – Can receive grants and tax-deductible donations. | – Limited liability protection for directors and officers. – Exempt from federal and state income taxes on profits related to its exempt purposes. – Donations are tax-deductible for donors. | – Must adhere to strict regulations and reporting requirements. – Profits cannot be distributed to members or directors. – Limited to activities that further its mission. |
| Sole Proprietorship | – Simplest and least expensive business structure to set up. – Complete control over business decisions. – No formal requirements for operating the business. | – Owner has unlimited personal liability for business debts and obligations. – Profits and losses reported on owner’s personal tax return. – Self-employment taxes apply. | – Unlimited personal liability. – Difficult to raise capital and attract investors. – Limited to the lifespan of the owner. – No separation between personal and business assets. |