Sole proprietorship
Testing a simple business alone
Strengths
- Low setup effort
- Simple to start
- Useful for early validation
Watchouts
- No liability separation
- Can look less formal
- Tax planning options are limited
Start a business
Business Structure Selector
Compare sole proprietorships, LLCs, S-corp elections, and corporations before you register. This is general guidance, not legal or tax advice.
Compare options
Pick by risk, tax complexity, and growth plans
Your state, income, co-owners, liability risk, and funding plans can change the right answer.
LLC
Most small businesses that want separation
Strengths
- Liability separation
- Flexible taxation
- Common for local and service businesses
Watchouts
- State filing and annual obligations
- Operating agreement still matters
- Tax treatment needs planning
S-corp election
Profitable owner-operated businesses
Strengths
- Can reduce some self-employment tax
- Keeps pass-through taxation
- Useful after revenue is stable
Watchouts
- Payroll requirement for owner wages
- More compliance
- Not a legal entity by itself
Corporation
Companies raising outside investment
Strengths
- Investor-friendly structure
- Clear share ownership
- Scales governance
Watchouts
- More formalities
- Potential double taxation
- Usually overbuilt for simple local businesses
Registration steps
Check name availability, registered agent rules, formation filings, tax accounts, and local licenses.
Startup budget
Estimate formation costs, software, launch marketing, equipment, deposits, and working capital.
When to get advice
Talk to a CPA or attorney before adding co-owners, raising money, electing S-corp status, or taking unusual liability risk.