Choose Your Business Structure

Your business structure determines your personal liability, how your income is taxed, and your compliance obligations. Most small businesses start as sole proprietorships and upgrade to an LLC once revenue and risk justify the cost.

The Main Options

Sole proprietorship. The default. No filing required. Your business and personal finances are legally the same — your personal assets are exposed to business liabilities.

LLC. The most popular structure. Creates legal separation protecting your personal assets. Formation costs $50 to $500 depending on state. Taxed as pass-through by default.

S-Corporation. An LLC or corporation with S-Corp tax status. The main benefit: split profit between salary and distributions to reduce self-employment taxes. Best for businesses generating $50,000+ in annual profit.

C-Corporation. A separate legal entity with its own tax return. Necessary for venture-backed businesses. Rarely right for small businesses due to double taxation.