There are many different ways to set up a business. Here are the most popular options in the United States.
- Sole Proprietorship: A businesses that consists of a single owner. The business is not recognized in a separate business form.
- DBA (doing business as): this is another name for a FBN (fictitious business name). This allows an individual or business to operate under another business name.
- General Partnership: A partnership where all members of said partnership share equal shares in profit and loss.
- Limited Partnership: at least one partner has unlimited liability for the debts and one or more partners have limited liability. Limited partners do not participate in the management of the business.
- , Inc (Corporation, Incorporated): used to recognize corporations. These are the only terms universally accepted by all 51 corporation chartering jurisdictions in the US.
- C Corporation: A C Corp is a separate legal entity and protects the owners/shareholder assets from creditor claims. Incorporating your business automatically makes you a regular or “C” corporation. If corporate profits are shared with owners as dividends, the owners must pay personal income tax on the distribution.
- S Corporation: After filing as a C corp, you have the option to file as an S corp with the IRS. This passes the profits and losses onto the business owner and are reported on their personal income taxes.
- LLC (limited liability company): the owners of an LLC enjoy limited liability without being a corporation. An LLC is viewed as a disregarded entity. The LLC’s income and expenses are filed on Schedule C of Form 1040 – the same form as used by sole proprietors.