When an entrepreneur is starting a business, there are a lot of things to consider and a lot of decisions. Selecting the right entity type is a critical step and it’s one of the most important decisions an entrepreneur can make. From liability protection to taxation, the type of business structure you choose will make an impact on your future profitability and success. To help with this process, the following business structure chart provides a high-level comparison of the most popular forms of business structure and their attributes.
Comparison Chart of the 7 Most Popular Business Structures
| ||Sole Proprietorship||General Partnership||C Corporation ||S Corporation||Professional Corporation||Nonprofit Corporation||Limited Liability Company|
|Formation||No filing required||No filing required||State filing required||State filing required||State filing required||State and federal filings required||State filing required|
|Limited personal liability||No||No||Yes||Yes||Yes, except for own malpractice||Yes||Yes|
|Transferability of interest||No||No||Yes||Generally limited||Generally limited||N/A||Yes, often limited|
|Duration||Until withdrawal or death of the owner||Unlimited||Unlimited||Unlimited||Unlimited||Unlimited||Unlimited|
|Pass-through taxation||Yes||Yes||No||Yes||No||Tax exempt||Yes, upon election|
|Ability to raise capital||Not as a separate entity||Yes||Yes||Yes, but shareholder limits||Yes||Yes, through donations and grants||Yes|
|Limitations on the number of owners||Yes||No||No||Yes||No, but all owners must be part of the same profession||N/A||No|
Still not sure which business structure is right for you? Below are some additional articles and resources to help you decide on your entity type.