The Basics of Business Types

The most common entities are Corporations, S-Corporations and Limited Liability Companies. Many people need help in deciding what type of entity to file for, we always suggest speaking to an accountant or a business attorney in your state in order to get advice for what type of entity would be best for you. Before contacting a professional it's probably a good idea to learn about the different types of entities. I'll give you a run down of the basics:


Limited Liability Company - Often referred to as an LLC, this type of entity is widely popular with smaller businesses, as it’s generally easier to take care of than a corporation. Since there are no stocks in an LLC, LLCs are owned and usually owned by members. You can have an outside party manage an LLC that you’re a member of, though it’s not usually what smaller companies choose  to do since they’re so small it’s not necessary to have an outside party manage their LLC.


Corporations – Corporations are entities that have shareholders and a board of directors. While the shareholders own the corporation, the board of directors run and make decisions for the corporation in the interest of the shareholders. Every shareholder can vote on the directors, and amendments made to a corporation’s articles. Corporations might sound like huge companies, but lots of times small businesses run by one or two people are incorporated, because a corporation might benefit them more than an LLC or another type of entity. An S-Corporation is essentially the same as a corporation, though it is taxed differently than a regular corporation, also known as a c-corporation. We suggest you speak to your accountant in regards to whether an S or C corporation is best for you.