BOOK of LISTS

 When forming your small business, you must make an important decision with regard to the structure of your company. There are various forms of businesses, each with its own pros and cons. The following is a list of the most popular and most common structures for small businesses…

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When forming your small business, you must make an important decision with regard to the structure of your company. There are various forms of businesses, each with its own pros and cons. The following is a list of the most popular and most common structures for small businesses.

1. Sole proprietorship

The most common form of business, in which the company is owned by one person who owns all profits, has complete control, and assumes all risk. The law views the company and the owner as one.

2. Partnership

This is a formation in which 2 or more people share ownership of a company. The partners share decision-making responsibilities, receive all profits, and assume all risk. Like proprietorships, the law views the company and its owners as one.

3. C corporation

This is a company that is owned by shareholders who have limited liability and can sell stock to raise money, and it is viewed as a separate entity from its owners. Decisions are made by a board of directors elected by the shareholders.

4. S corporation

This is similar to a C corporation, differing only in terms of taxation. An S corporation allows profits and earnings to be viewed as distributions, meaning the company is not liable for payroll taxes on the total amount of profits and earnings. The tax structure is closer to that of a partnership than a corporation.

5. LLC

A limited liability company, or LLC, is legal in most states and combines the limited liability of a corporation with the tax structure of a partnership. The owners of the company are members, and the company cannot have all characteristics of a corporation.

Source: Small Business Administration (https://www.sba.gov/).