Different Types of Corporate Structures
You’ll learn about the four main types of business entity below — LLCs, S Corporations, C Corporations and nonprofits, so you can decide which will best meet your needs.
Limited Liability Company (LLC)
The LLC is one of the most popular types of business entities. It’s ideally suited for smaller organizations and startups, for several reasons:
The cost and policies governing an LLC do vary from state to state. Check out our LLC State Information resource for additional info on your state.
LLC Limited Liability Protection
Like C Corps and S Corps, LLCs provide their owners with limited liability protection. This means the business assets are owned separately by the LLC, not by the owners. Any liability the business has (e.g. monies owed, equipment, depreciation, lawsuits, etc.) are purely the liability of the business, and do not (generally) have any impact on the individual owner’s personal assets.
Types of Tax an LLC is Liable For
It’s important to note that an LLC will be liable for certain types of tax, for example:
Business Structure
Comparison Chart
protection
LLC
LLCs provide personal asset protection, which shields you from being personally liable for business debts.
C-Corp
C Corps provide personal asset protection, which shields you from being personally liable for business debts.
S-Corp
S Corps provide personal asset protection, which shields you from being personally liable for business debts.
Nonprofit
Nonprofits provide personal asset protection, which shields you from being personally liable for business debts.
STATE FILING FEES
LLC
LLCs are required to pay formation fees to the state. Fees will vary based on the state of incorporation.
C-Corp
C Corps are required to pay formation fees to the state. Fees will vary based on the state of incorporation.
S-Corp
S Corps are required to pay formation fees to the state. Fees will vary based on the state of incorporation.
Non-Profit
Nonprofits are required to pay formation fees to the state. Fees will vary based on the state of incorporation.
LLC
Depending on the state of incorporation, reports and fees may be required.
C-Corp
An annual report and franchise fees are generally due each year along with other reports and fees, which varies depending on the state of incorporation.
S-Corp
An annual report and franchise fees are generally due each year along with other reports and fees, which varies depending on the state of incorporation.
Non-Profit
For Nonprofits this varies from state to state.
MANAGING YOUR BUSINESS FEES
LLC
LLCs must be member or manager managed according to the terms of the operating agreement.
C-Corp
C Corps are required to have shareholder elected directors who oversee and elect officers to run the day-to-day operations of the company.
S-Corp
S Corps are required to have shareholder elected directors who oversee and elect officers to run the day-to-day operations of the company.
Non-Profit
Nonprofits are managed by their board of directors following the regulations set forth in their Bylaws.
LLC
Changes in ownership of an LLC are dependent on the terms of the operating agreement.
C-Corp
Ownership changes in a C Corp are easily made through the sell of stock to new or existing shareholders.
S-Corp
Ownership changes in an S Corp are easily made through the sell of stock to new or existing shareholders.
Non-Profit
Nonprofits have no owners.
LLC
Depending on the state of incorporation, an LLC may be required to file an annual report and/or pay franchise fees.
C-Corp
After formation, C Corps have many ongoing formalities such as writing bylaws, selecting directors, holding initial and annual shareholder meetings, and issuing stock.
S-Corp
After formation, S Corps have many ongoing formalities such as writing bylaws, selecting directors, holding initial and annual shareholder meetings, and issuing stock.
Non-Profit
After formation, Nonprofits have many ongoing formalities such as writing bylaws, selecting directors, and seeking tax exempt status.
LLC
LLCs are not allowed to sell stock but may be able to raise capital via bank loans and various other avenues.
C-Corp
C Corps may issue many types of stocks, which may be sold to an unlimited number of shareholders.
S-Corp
S Corps may issue one type of stock, which may be sold to a maximum of 100 shareholders.
Non-Profit
Nonprofits may obtain bank loans, grants, venture capital, and tax-exempt donations. In some states, Nonprofits may sell stock.
TAX
LLC
LLCs are not taxed at the corporate level. Instead, all profit and losses are reported with the personal income taxes of each member.
C-Corp
The income of the C Corp is taxed at the corporate level and then again at the shareholder level.
S-Corp
S Corps are not taxed at the corporate level. Instead, all profit and losses are reported with the personal income taxes of each shareholder (owner).
Non-Profit
The income of Nonprofits is taxed at the corporate level unless they apply for and are granted tax-exempt status.
LLC
LLCs are not taxed at the corporate level.
C-Corp
The income of the C Corp is taxed at the corporate level and then again at the shareholder level.
S-Corp
S Corps are not taxed at the corporate level.
Non-Profit
The income of Nonprofits is taxed at the corporate level unless they apply for and are granted tax-exempt status.
LLC
LLCs are not eligible for tax-exempt status.
C-Corp
C Corps are not eligible for tax-exempt status.
S-Corp
S Corps are not eligible for tax-exempt status.
Non-Profit
The income of Nonprofits is taxed at the corporate level unless they apply for and are granted tax-exempt status.
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