TYPES OF BUSINESS ENTITIES: AN OVERVIEW
A business entity simply means an organization that has been formed to conduct business. However, the type of entity you select for your business will determine how your company is structured and how it will be taxed. Therefore, you will want to use careful consideration when it comes to the selection of the entity type you use to operate your business. While there are additional business entity types, we will provide insight on the most commonly selected options: sole proprietorship, general partnership, limited partnership, LLC, C-corporation, or S-corporation. The chart below will provide a brief summary of the various entity types a business owner can choose from:
Sole Proprietorship
Unincorporated business with one owner or jointly owned by a married couple
Unincorporated business with one owner or jointly owned by a married couple
General Partnership
Limited Partnership
Registered business composed of active, general partners and passive, limited partners
Limited Liability Company (LLC)
Registered business with limited liability for all members
C-corporation
Incorporated business composed of shareholders, directors and officers
S-corporation
Incorporated business that is taxed as a pass-through entity