Limited Liability Company (LLC): An LLC is a corporate structure in which the owners are not personally liable for the company’s debts or liabilities. LLCs combine the characteristics of a corporation with those of a partnership or sole proprietorship. LLCs do not pay taxes, their profits and losses are passed through to the members, who claim them on their tax returns.

Benefits:

• Owners are protected from personal liability for any debts or obligations
• Owners can choose how the business pays taxes
• Not required to have annual meetings
• Not required to have a board of directors
• Can have unlimited shareholders
• Maintain pass-through taxation, which helps in the case of small businesses

S - Corp: A small business corporation that is treated for federal tax purposes as a partnership. This type of corporation must have less than 100 shareholders.

Benefits:

• Avoids double taxation by passing the income through to the owners
• Protects the personal assets of the shareholders
• In general, able to get more loans
• Owners share net profits and report their share on personal income taxes

C - Corp: A legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity. C corps are also subject to corporate income tax. This type of corporation is subject to a double taxation, the taxing of profits are both administered at the corporate and personal level.

Benefits

• Owners do not have personal liability
• Gain more access to financial resources
• Exists separately from the lives of its stockholders

Nonprofit: Nonprofits are organizations which are built to address a social purpose. Nonprofits are excused from federal tax liability. However, these organizations must distribute surplus earnings to a social cause.

Benefits:

• Does not pay income taxes on money it receives for charitable purposes
• Donors are able to use their donation as a tax deduction