Types of Business Entities, Compared
When you start a business, it’s important that you conduct sufficient research on
the various types of business entities, as the tax structures and flexibility of
each will ultimately affect your small business’s bottom line. We’ve brought together
information on all five main entity types—sole proprietorship, partnership, S corporation,
C corporation, and LLC—so that you can make an informed decision and choose the
type of business entity that’s best for your specific, unique situation.
With the following pages, you can learn about each entity type, as well as the differences
between various types and benefits to each. We hope the information provided here
will give you the tools you need to begin your entrepreneurial journey.
A sole proprietorship is the simplest type of DBA: this structure is one individual
doing business as a name other than his or her own.
A partnership is very similar to a sole proprietorship, with the obvious difference
that there are more than one individuals involved in the business.
An S corporation is a type of incorporated entity that has significant tax benefits,
but a comparatively rigid ownership structure.
A C corporation has a more flexible ownership structure than an S corporation, but
it experiences what is known as “double-taxation.
An LLC, or limited liability company, has options as far as the tax classification
it elects with the IRS, making it a flexible option. An LLC is subject to a self-employment
DBA vs. Incorporation
DBAs and corporations are very different entity types structurally; this page contrasts
some of the features of a DBA with the features of a corporation so that you can
see how they relate to one another.
LLCs and S Corporations are known as some of the more tax-beneficial entity types
because they both avoid the double-taxation of a C corporation, but the similarities
between the two entity types stop there.
LLCs, S Corps, and C Corps
This comparison chart will help you visualize the features and characteristics that
the three main incorporated entity types have in common.