Business types 101

Better for max flexibility in how you manage and run your business; board of directors not required

Unlimited owners (aka “members”) allowed

You’re not personally on the hook for business liabilities

Taxed once or twice; you’re free to choose which can help minimize taxes

Ongoing filings and fees to stay in compliance

LLCs can’t go public

Not recognized globally; you may be taxed as a corporation in other countries

Better for smaller corporations

100 shareholders max

You’re not personally on the hook for business liabilities

Taxed once—only shareholders pay on profits received

Ongoing filings and fees to stay in compliance

Less management flexibility; must have a board of directors

More admin; strict rules about holding meetings and keeping records

All shareholders must be U.S. citizens or residents

Best if you plan to go public one day; can issue shares to founders, employees, and investors

Unlimited owners (aka “shareholders”) allowed

Recognized internationally

Preferred by investors

You’re not personally on the hook for business liabilities

Taxed twice—business pays at the corporate level, and shareholders pay on income received

Ongoing filings and fees to stay in compliance

Less management flexibility; must have a board of directors

More admin; strict rules about holding meetings and keeping records

Best if you’re supporting a good cause and want to protect your personal assets

No owners; you can start or oversee a nonprofit, but you can’t technically own it

Looks more official to potential donors

Gives you access to public and private grants

You’re not personally on the hook for business liabilities

Tax exempt—if you have 501(c)(3) status with the IRS

Ongoing filings and fees to stay in compliance

Less management flexibility; must have a board of directors

More admin; strict rules about holding meetings and keeping records

Pricier application and filing fees if you try for 501(c)(3) tax-exempt status

Better if you need an easy set-up

One owner max

You’re personally on the hook for business liabilities

Taxed once—you pay on profits in your personal tax return

Less hassle; separate tax return not needed

No personal liability protection