Company Registration in USA

What Are the 4 Types of Business Structures ?

• 1

  Limited Liability Company

  Commonly referred to by its abbreviated name LLC, this business structure is known for its simplicity and has grown in popularity during the last 20 years. An LLC can be owned by one person — called a single-member LLC — or have multiple members that share ownership in the business.

  As the name of this entity structure also discloses, it helps provide business owners with protections when it comes to personal assets. LLCs also offer flexibility and do not require a board of directors and the filings that corporations are responsible for. This means less paperwork and more time and money to devote to building your business.

• 2

  C Corporation

  A corporation is an entity that is separate from its owner or owners and run by a board of directors and shareholders. This means that a corporation does not rely on one person and does not dissolve when an owner or board member dies or leaves the company. This differs from an LLC, which can be owned by a single member or multiple members and can dissolve if an owner dies.

  Another key difference is that a corporation incurs double taxation. Unlike LLCs which can pass through the profits of the business to the owners, who then report them on their personal taxes, C Corps must pay taxes on their profits. They then distribute the remaining profits to shareholders, who must also pay taxes on these earnings.

  This type of business entity structure is better suited for larger businesses. It is also a good business structure if you plan to grow your business, become public and offer stock in your business or you want to attract investors and venture capitalists.

• 3

  S Corporation

  S Corps can boast the flexibility of an LLC while allowing transferability of ownership that LLCs cannot enact as a rule. They are less complex than C Corporations because they offer pass-through taxation where taxes are reported on personal income statements. This takes away the double taxation that a company incorporated as a C Corporation incurs.

• 4

  Non-profit

  A non-profit is a business that has been created for a purpose other than making a profit. Revenue earned by a non-profit goes toward a specific goal or cause. In addition, money earned by a non-profit also goes into the business to pay employees, cover overhead costs, and even expand.

  There are more than 1.7 million non-profits in the United States. Common non-profit businesses include hospitals, churches, schools, museums, food banks and homeless shelters.