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LLC, S corp, or C corp?

Choose the right entity for your business. You can see a comparison between all the entities here.


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Comparison between entities

Determine the entity type that best suits your business.

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Common questions

What is business formation?

Business formation is an umbrella term for several different ways of legally structuring a business. They include becoming a limited liability company (LLC), partnership, C corporation, S corporation, cooperative, or nonprofit (commonly qualifying and referred to as 501(c)(3)).

The right legal structure for your business is one of many things that are important to consider before starting your business. Carefully consider the pros and cons of each business entity to determine which features best meet your needs.

Selecting a business structure is not a permanent decision. As a business matures, ownership may change the legal structure. For example, some small businesses begin as sole proprietorships and then grow into LLCs.

Business formation is sometimes referred to as "incorporation" or “organization”. However, since "incorporation" is generally associated with forming a corporation and “organization” is generally associated with forming an LLC, it is better to use the broad term "formation."

Why should I consider business formation?

The business entity is the foundation of the business in the same way that the frame is the foundation of the house. If the foundation is shaky or cuts corners, it will inevitably affect the business down the line.

Selecting a legal structure for your business defines the company legally and strategically. You also need to select a legal structure for your business in order to comply with the law in your state. Each type of business entity has its own paperwork requirements, tax ramifications, personal asset protections, and costs.

What is a registered agent?

A registered agent is the person responsible for receiving service of process for the corporation. All corporations must have a registered agent available during regular business hours in their state of incorporation to receive court summons and other legal notices.

Do I still need to choose a business entity if my business is online?

Yes. Many people are running businesses based entirely online. This provides entrepreneurs with the opportunity to make money with little to no overhead, a faster way to get up and running, and the chance to operate all over the world. However, online businesses should still create a legal structure. Failing to consider business formation is one of the major mistakes online businesses fall prey to.

When do I need to register a "Doing Business As" (DBA) trade name?

You need to register a fictitious business name (also called a trade name, DBA name, or assumed name) whenever you are doing business under a different name than your personal name, the names of partners in a partnership, or the registered name of an LLC or corporation. When you form a sole proprietorship or partnership, the name of the business defaults to the name or names of the owners unless you register a new one.

For example, if Linda Clark owns a home cleaning business and wants to call it "Sparkling Home Cleaning," then she must file a form with the appropriate office, usually the Secretary of State's Office or the County Clerk's Office.

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