Choosing the right business entity is one of the mostimportant decisions you’ll make as an entrepreneur. It impacts taxes, liability, and funding opportunities. Here’s a breakdown of the three most common options:
LLC (Limited Liability Company):
- Flexible, simple to manage.
- Pass-through taxation avoids corporate tax.
- Good for small businesses seeking liability protection.
S-Corporation:
- Pass-through taxation with stricter requirements.
- Owners can take a reasonable salary + dividends to reduce self-employment tax.
- Limited to 100 shareholders, all U.S. citizens.
C-Corporation:
- Separate taxable entity, subject to double taxation (profits + dividends).
- Attractive for raising capital from investors.
- Unlimited shareholders, including foreign.
Which Is Right for You?
It depends on your goals. Small service businesses often choose LLCs. Growth-oriented companies looking for investors may prefer C-Corps. S-Corps sit in the middle, offering some tax advantages with more rules.
PAC Consulting guides entrepreneurs in every state through entity selection and filing, helping you choose the structure that aligns with your goals.