There comes a time for every business owner when they have to decide on the right structure for their business. Figuring out which one is right for you depends on the amount of liability protection, tax benefits and level of formality you’re looking for.
For an in-depth look at each business structure, we highly recommend checking out our business entity guide. But for now, we’re here to provide an overview of (and some excellent resources for) the four most popular options: forming an LLC, corporation, nonprofit, and filing a DBA (Doing Business As). Enjoy!
LLCs are by far the most popular business structure for solopreneurs, small teams, and startups that aren’t looking to go public and offer shares of their company. LLCs offer the perfect cocktail of personal liability protection and tax benefits, and don’t require crossing as much red tape as corporations.
Use the links below read our free LLC formation guides tailored to your specific state, or to learn about the top LLC filing services on the market. Using a professional filing service can make the LLC formation process far quicker and less expensive, and most providers throw in plenty of other helpful services along the way!
These are more complex business entities that by law involve shareholders, a board of directors and corporate officers. The legal obligations here are far more substantial, as are compliance requirements and financial risk. Unlike LLCs, corporations are required to pay corporate taxes, unless they’re granted S-Corp status by the IRS.
If you’re thinking about forming a corporation, check out our favorite online incorporation providers below, or find your state-specific guide to learn what the DIY route entails.
Unlike a corporation or an LLC, a DBA (Doing Business As) isn’t a business structure. A DBA gives you the ability to legally conduct business under an alternative name. For instance, most states require sole proprietors to use their own legal names as their business names, unless they file a DBA. Established LLCs and corporations may also file DBAs in an effort to rebrand and reach a new market.
To learn how to file a DBA in your state, or find a top-notch DBA filing service to do all the hard work for you, use the links below.
Nonprofits come in many different forms and cover a wide array of initiatives – healthcare, education, environmental protection, and so on. Some have paid employees, while others are totally volunteer-based.
Like corporations, nonprofits get complex quickly and aren’t nearly as easy to form as LLCs. There’s typically lengthy red tape and plenty of paperwork, especially if you’re aiming to get 501(c)(3) status (federal tax exemption). In corporate form, they’re required to have a board of directors, officers and many other formal elements, just like a for-profit corporation.
Of course, the reward is well-worth the hard work in the end — but this is one structure we definitely recommend getting professional assistance with. Learn about the best nonprofit resources by using the links below!
Should I just have a lawyer form my business?
The gist of this one is, you can and probably should if you can afford it. Obviously, a lawyer is going to be the most thorough, but our favorite cost-effective 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 won’t get any liability protection or be able to leverage any other perks. We highly recommend reading through our business structure comparison guide to learn about the pros and cons of each.
After forming my business is there anything else I need to do?
Typically there are ongoing compliance requirements, but these vary by state. Using an online filing service is the best way to stay on top of your obligations, but if you’re planning on going completely DIY, just make sure to keep a close eye on deadlines for fees and legal paperwork.
Which business structure is best for my business?
It all depends. Like we said, LLCs are the most popular structure, but different businesses have different needs and goals. Fully understanding your options is the best way to make a well-rounded decision for your business.