Entity Types

When you start a small business, you must decide whether it will be a sole proprietorship, partnership, corporation, or limited liability company (LLC).

Questions to ask: What type of business do you run? How many owners do you have? What is your financial situation?

There is no one choice that suits every single business: Business owners have to pick the structure that best fits their needs.

Comparison Chart: Compare business entities.

Sometimes the best ownership structure for your business depends on the type of services or products it will provide.

Other times business formation considerations are based on such questions as: Do you plan on going public or issuing shares? Do you plan to have international investors, or any investors at all?

If your business will engage in risky activities you'll almost surely want to form a business entity that provides personal liability protection (limited liability), which shields your personal assets from business debts and claims. A corporation or a limited liability company (LLC) may be the best choice for you.

Incorporating or Forming a Limited Liability Company (PDF): Receive a free, automatic download of our incorporation guide for more details. Print it out and read it any time.