Legal entity represents the identity of a
business at the state level
Tax classification determines how the IRS
will tax at the federal level
Liability Protection
None
Tax Treatment
Personal Income
Self-Employment Tax
Best For
Solo Startups testing the waters
Liability Protection
Yes
Tax Treatment
Pass-Through (flexibile
Best For
Small teams needing asset protection
Liability Protection
Yes
Tax Treatment
Varies: Double Tax vs Pass Through
Best For
Venture Ready Businesses, investors
Liability Protection
Yes
Tax Treatment
Tax Exempt Status (if qualified)
Best For
Mission Based, Charity Ventures
The following table is intended only as a guideline.
Pros:
1) Minimal set up and fees
2) Full control over decisions
Cons:
1) Unlimited personal liability
2) High self-employment taxes
Pros:
1) Protect personal assets
2) Simple tax flexibility
Cons:
1) Cannot issue stock; may dissolve if not compliant
Pros:
1) Shield again personal liability
2) Attact investors or issue stock
Cons:
1) Complex tax and compliance requirements
Pros:
1) Tax exempt status
2) Promotes goodwill and missiong alignment
Cons:
1) Strict recordkeeping and public scrutiny
The following table is intended only as a guideline.
A biennial statement is a required filing every two years for specific LLCs, LLPs, and corporations under Business Corporation and Limited Liability Company Laws.
Non-profits and limited partnerships are exempt from this requirement.
The statement must be filed with the Department of State.