There comes a time for every business owner when they, and their team, have to decide whether to register their company with the state, form a corporation, or officially become a non-profit. It’s primarily about leveraging the many perks, security, and limited liability protection.
For an in depth look at each business structure, we highly recommend checking out our business entity guide to weigh the pros and cons for you.
Below we’ll touch on the four most popular business structures and then there are links to our resource reviews and further information as well as top providers. Enjoy!
LLCs are by far the most popular business structure for solopreneurs, smaller teams, and startups that aren’t ready to go public and offer shares. The costs of forming an LLC varies depending on the state, but the primary reasons are pretty uniform – personal and asset protection, tax reasons, less red tape and formalities, more flexibility vs. corporations, etc.
Through the links below you can leverage our free LLC guide, or look at our reviews of the top LLC filing services which make the process less expensive, faster, and offer plenty of other services along the way.
These are more complex business entities that by law involve shareholders (vs. members for LLCs), boards of directors (vs. partnerships) and investors. Legal obligations are far more substantial, as are compliance matters and financial risk. Also, the process of forming a corporation is more difficult.
Corporations come in two distinct forms, namely C-corps and S-corps. The primary difference has to do with how they’re viewed under the law and taxed.
Again, you can learn all about corporations and how to form one yourself through our guide linked below or check out our top provider reviews.
DBAs are relatively simple. An individual or business entity files a DBA when they intend to conduct business under any name other than either a human name or the name of their brand. So, for example selling a different flavor of ice cream under a different name other than “Tony’s Ice Cream.”
This is often done for compliance reasons, for sole proprietors who want to keep their personal names out of it to perhaps look more professional and so forth.
We’ve put together a great DBA guide to help you distinguish if you need one, or should file one, and as always, we’ve reviewed the best DBA filing services.
The benefits of forming a nonprofit revolve almost exclusively around obtaining 501c3 status, or in other words, paying no income taxes. Nonprofits comes in many different forms and cover a huge array of initiatives – healthcare, education, environmental, religious, and so on. One big distinguishing factor is whether your nonprofit will have paid employees or be based solely on volunteers.
Like corporations, nonprofits can get complex quickly and aren’t anywhere near as easy to form as say an LLC or sole proprietorship. There’s typically lengthy red tape, plenty of paperwork, and in corporate form there’s a board of directors, officers and many formalities involved.
Learn more below or check out the best services for forming a nonprofit.
Should I just have a lawyer form my business?
The gist of this one is, you could, if you can afford it and you want super-specialized (expensive) legal help. Obviously, a lawyer is going to get you the most bang for your legal buck, however our favorite options are doing it yourself or having a reliable online filing service take care of the heavy lifting for you.
Do I actually have to ‘form’ my business?
Technically no, but if you don’t form your business you’ll get no limited liability protection or any of the other perks of forming a business. We highly recommend checking out our business structure comparison guide to see the pros and cons of each – for example the differences between a C-corporation and an LLC.
After forming my business is there anything else I need to do?
Typically, there’s ongoing compliance matters no matter what you do in your state. You’re going to need to keep a close eye on and manage fees and paperwork. Using an online filing service is the best way to stay on top of your obligations, but it can be time consuming and complex if you do it yourself.
Which business structure is best for my business?
It gets tricky. LLCs are the most popular for business owners today unless you have the needs of a corporation or non-profit. Fully understanding your options is the best way to make the most productive decision. Again, consider leveraging our free business structure guide.