Starting a new business is exciting—but it can also be overwhelming. You may have the name, concept, and logo all handled, but like many business owners, you may wonder which legal entity you should classify your company as. If you need help, this blog on the types of business entities and which one is right for you can help you start the incorporation process.

C Corporation

C corporations require the business to pay taxes. However, owners do not have liability.

A C corporation can have just one employee, but there are no limits on how many employees it can hire. So, if you see your business getting bigger and bigger, you may want to think about this option.

S Corporation

For those who like some of the main appeals of a C corporation, such as no owner liability, they may also want to consider an S corporation. It does have a major difference, though.

If you own an S Corporation, you should know that it does not need to pay any taxes. Still, there is a financial responsibility for shareholders. They will need to ensure that the income they earn from an S corporation is reflected on their filed individual tax returns.

Finally, it can have as few as one employee, or as many as 100. So, you could have a one-person business, a small business, or room to expand. Each employee must also have U.S. citizenship or permanent residence in the country.

LLP (Limited Liability Partnership)

This is the only option that requires your business have more than one member. After all, it is a partnership!

However, you do have a choice as to what type of LLP you will run. You can opt for a general partnership, but be aware that type will come with extra responsibility, since it requires personal liability for the company. A limited partnership, on the other hand, doesn’t have any liability. So, its employees must pay self-employment and personal taxes.

There’s one other big difference between the two. General partnerships allow management to have authority, while limited partnerships do not. It’s good to thoroughly explore the pros and cons of both types before making your decision. We can always help with that if you have any questions or concerns!

LLC (Limited Liability Corporation)

As you explore the types of business entities and which one is right for you, you might want to consider an LLC. Like the name suggests, the company’s owner is not personally liable for taxes. Instead, its employees must pay personal or corporate taxes in addition to self-employment taxes.

If you aim to employ contracted workers, this choice could suit your business’s needs. Or, if you just want to employ yourself, you can choose to do that as well. You only need one person to form an LLC, though you can hire as many people as you want.


Now that you know more about the types of business entities and which one is right for you, you’re on track for an incredible journey. Still have questions? Don’t stress! Todd Greene, CPA, can assist you with classifying your business.

And, if you need any additional support along the way, we can also handle taxes, payroll, and more. Reach out to us to get started. As for learning more about business financials and tax planning, browse our blog here.