When discussing a specific type of business, it is helpful to look at it through two distinct lenses: legal structures (how the company is owned, taxed, and protected) and operational models (how the business makes money). Legal Business Structures
Choosing a legal structure is one of the first major steps when launching an entity, as it determines your level of personal risk and how taxes are filed.
Sole Proprietorship: A business owned and run by a single individual. The simplest structure, but offers zero personal asset protection from business debts.
Limited Liability Company (LLC): A flexible, hybrid structure that protects the owner’s personal assets from lawsuits while offering simple “pass-through” personal taxation.
Partnership: An arrangement where two or more individuals collaborate, sharing both the daily operational workloads and the financial profits.
C Corporation: A completely independent legal entity owned by shareholders. It provides the absolute strongest liability protection, but faces “double taxation” on corporate and personal levels.
S Corporation: A special corporate status designed for smaller businesses (under 100 shareholders) that avoids double taxation by passing income directly to personal tax returns. Operational Business Models
Choose a business structure | U.S. Small Business Administration
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