Last Updated: May 3, 2024, 1:56 pm by TRUiC Team

Business Formation Guide

When starting a small business, one of the first decisions you'll need to make is choosing the best business structure. The three most common formal business structures for small businesses are:

  1. Limited Liability Companies (LLCs) - the most popular choice for small businesses
  2. Corporations
  3. LLCs taxed as S Corps

Factors to Consider When Choosing a Business Structure

When deciding on the best business structure for your small business, there are several key factors to consider. These factors will help you determine which structure aligns best with your business goals, personal liability concerns, and tax planning strategies:

Learn more about how to choose the best business structure for your small business

1. Limited Liability Company (LLC)

LLCs are the most popular choice for small businesses, and for good reason. Some of the key benefits of forming an LLC include:

Learn more about what an LLC is and how it works

Follow our step-by-step guide on how to form an LLC

2. Corporation

Corporations are a more complex business structure that is best suited for larger businesses or those planning to raise capital. Here are some of the main characteristics of corporations:

Learn how to start a corporation step-by-step

3. LLC Taxed as an S Corp

Some LLCs may benefit from being taxed as an S Corp, which can offer potential tax savings. Here are a few key points to keep mind mind before choosing this option:

Learn more about what an S Corp is and how it works

Compare S Corps, C Corps, and LLCs to see which is right for your business

Remember, while you can change your business structure later, it's best to choose the right structure from the start to avoid unnecessary complications and costs down the road. Consider consulting with a business attorney or accountant to help you make the best decision for your small business.