Which Business Structure is Right for You? A Comparison of Options in the U.S.

Starting a business in the United States involves several important decisions, and one of the most critical is choosing the right legal structure. Your choice will affect your personal liability, how you pay taxes, and how your business operates on a daily basis. Below is a clear comparison of the most common business structures:

1. Sole Proprietorship

• Ownership: One person

• Liability: Limited personal liability

• Taxes: Personal income tax, self-employment tax

This is the easiest and most affordable way to start a business, but it offers the least legal protection.

2. Partnership

• Ownership: Two or more people

• Liability: Limited personal liability, unless structured as a limited partnership

• Taxes: Personal income tax and self-employment tax (except for limited partners)

Great for family businesses or business partners looking to share responsibilities and profits.

3. Limited Liability Company (LLC)

• Ownership: One or more people

• Liability: Owners are not personally liable

• Taxes: May be taxed as self-employed, personal, or corporate income

A popular and flexible structure that offers liability protection and various tax options.

4. C Corporation

• Ownership: One or more people

• Liability: Owners are not personally liable

• Taxes: Corporate taxes

Best suited for larger businesses or those looking to raise capital from investors and shareholders.

5. S Corporation

• Ownership: Up to 100 shareholders, all must be U.S. citizens

• Liability: Owners are not personally liable

• Taxes: Personal income tax

Provides the benefits of a corporation with pass-through taxation similar to an LLC.

6. Nonprofit Corporation

• Ownership: One or more people

• Liability: Owners are not personally liable

• Taxes: Exempt from taxes, but cannot distribute profits

Ideal for organizations focused on social, educational, or community impact.

✅ Which One Should You Choose?

Your decision should be based on:

• The number of owners or partners

• How much personal liability you’re willing to take on

• The tax burden you're prepared to manage

• Your long-term business goals

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💬 Need Guidance?

At MDR Tax Filing, we help you choose the structure that’s right for your business. From registration to legal compliance and tax planning, our team is here to guide you every step of the way.

📞 Call us at (813) 522-9745 or (813) 403-1724

🌐 Visit www.mdrtaxfiling.com

Start your business on solid ground — with the support of experienced professionals.