Form Business Entity
Selecting the ideal legal and tax structure - Sole Proprietorship, Partnership, LLC, C-Corp, or S-Corp - with precision IRS classification from Day 1.
Choosing the Right Legal & Tax Structure for Your Venture
Choosing a business entity is one of the most critical foundational decisions you will make. This decision dictates personal liability exposure, day-to-day administrative burdens, investor suitability, and precisely how profits are taxed by the Internal Revenue Service and state departments of taxation.
LLCs & S-Corporations
Profits and losses flow through to the owner's personal tax returns, eliminating entity-level federal double taxation while offering full personal limited liability.
C-Corporations (DE / NY)
Standard choice for institutional venture capital, multiple share classes, stock option plans (ESOP), and potential Section 1202 Qualified Small Business Stock (QSBS) capital gains exemptions.
Five Primary Business Structures:
- Sole Proprietorship: Simple and informal, but carries unlimited personal legal liability. Best suited only for low-risk initial testing.
- Partnership (GP / LP): Shared ownership where earnings pass through to partners via Form 1065 and Schedule K-1s.
- Limited Liability Company (LLC): The most versatile modern entity. Provides bulletproof personal liability protection combined with flexible tax election options.
- S-Corporation (Subchapter S): Ideal for operating businesses netting $50k+ in profits, allowing significant savings on Medicare and Social Security taxes via reasonable salary allocations.
- C-Corporation (Form 1120): Mandatory for venture-backed companies issuing preferred stock, foreign parent entities, or founders seeking corporate reinvestment strategies.
Official SBA & Federal Guidance:
For statutory guidelines on entity registration and small business programs, consult the U.S. Small Business Administration (SBA) portal at sba.gov/business-guide/choose-business-structure.
What You Receive
Frequently Asked Questions
What is the difference between an LLC and an S-Corporation?+
An LLC is a flexible legal entity created at the state level that limits personal liability. By default, a single-member LLC is taxed as a disregarded entity (Sole Proprietorship) and a multi-member LLC as a Partnership. An S-Corporation is a tax status electable by an LLC or Corporation via IRS Form 2553 to potentially reduce self-employment payroll taxes once net profits exceed an officer reasonable salary.
Which business structure protects personal assets the best?+
Both LLCs and Corporations establish a corporate veil separating business debts and liabilities from personal assets. Sole Proprietorships and General Partnerships offer zero liability shield, putting personal homes, savings, and investments at risk for business obligations.
Can non-US citizens or foreign residents form a US business entity?+
Yes! Non-residents can form a US LLC or C-Corporation in business-friendly states like Delaware, Wyoming, or New York without needing a US Social Security Number (SSN) or US residency. We assist with foreign passport EIN acquisition and mandatory annual Form 5472 filings.
What ongoing annual compliance is required after entity formation?+
Depending on your state of formation, you will need to file an Annual Report / Franchise Tax return (such as Delaware's Annual Franchise Tax due March 1 for corporations or June 1 for LLCs), maintain a registered agent, file required federal tax returns, and comply with FinCEN Beneficial Ownership Information (BOI) reporting.
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