Most Popular Business Types (2024)

It is time to choose the goals for a new year to come, and you can check as done choosing your business type and structure

With this post, you can turn your business idea into reality and choose the structure that will represent the type of business you may have.

Choosing your business type and structure can help you determine the type of corporate taxes that your business will have and you will be responsible for.

The type of business you choose will also affect your liability for your business debts. Your business structure will affect your options even when you apply for funding.

see below the different types of business learn about the 10 different types and structures available for your small business, this article will help you decide which one is right for you.

Types of Business Structures

Are you de only owner of the business?, Do you have partners? your business depends on whether or not you are alone or have partners, the amount of liability you are  accepting, if you are creating shares and the licenses and insurance you would need for your business.

Sole Propietorship

A sole Proprietorship is an unincorporated entity owned and operated by a single person. Its main advantage lies in its simplicity: sole proprietorship is the default business entity designation for anyone selling a service or product themselves, and requires no special filing.

Sole Proprietors have complete control of their companies, and its taxation. If you have an LLC or want to create an LLC keep in mind that you will need to choose to be treated as a Sole Propiertorship otherwise you will be treated as a corporation.

The cons about this business type is that it offers the lowest protection for owners, sole proprietors will be fully liable for their companies’ financial and legal situation.

This means that if your business is having difficulties, your personal assets may be drawn to settle business debts.


General Partnership

A general partnership is a business arrangement by which two or more individuals agree to share responsibilities, assets, profits, and financial and legal liabilities of a jointly-owned business.

Like sole proprietorships, general partnerships are subject to pass-through taxation, this mean they are only taxed once, at the partners’ personal income levels.General partners are equal participants in the entity, meaning everyone has a say.

General partnerships have some of the weakness of a solo proprietorship  because legally there is not distinction between the general partners and the partnership itself, all owners are subject to unlimited liability for the company’s debts and damages. Creditors and lawsuit plaintiffs can reach partners’ personal assets, partners are liable for the business conduct of all other partners a good reason to choose your partners wisely!

Limited Partnership

A limited partnership is a specialized form of general partnership. While it is very similar to a general partnership in most aspects, the limited partnership is made up of at least one or more general partners and at least one or more limited partners.

A limited liability partnership is similar to a limited liability company (LLC) in that all partners are granted limited liability protection. However, in some states the partners in an LLP get less liability protection than in an LLC. LLP requirements vary from state to state.

Advantages of a limited partnership include: The business can raise capital by enticing investors to become limited partners by offering them personal liability protection. Compared to an LLC or corporation, a limited partnership is easier and cheaper to form, with fewer record-keeping and reporting requirements.

Limited Liability Partnership (LLP)

In an LLP, each partner has limited liability for the partnership’s debts and claims. This means that partners are not liable for the misconduct or negligence of other partners. However, depending on the state, partners may be liable for contractual debts.

LLPs are non-corporate legal entities that offer partners flexibility and control over how the LLP is managed. LLPs are easy to set up and maintain, and offer the benefits of both private limited firms and partnerships.

Some disadvantages of LLPs include:

  • Impermanence of existence
  • Division of control
  • Difficulty finding compatible partners
  • Difficulty raising additional capital
  • Owners’ salary/wage cannot be treated as expense and therefore not tax deductible

C Corporation

A C corporation, or C corp, is a legal structure that taxes its owners separately from the entity. It’s the most common type of corporation in the U.S.

A C corporation’s profit is taxed twice. The first time is as business income at the entity level. The second time is when distributed as dividends or realized as capital gains at the shareholder level.

A C corporation is owned by its shareholders, who each own stock in the company. Unlike other structures, C corporations can have an unlimited number of shareholders. A C corporation protects the owners’ personal assets from creditors.

C corporations may offer lower audit risk, tax deductible expenses, and self-employment tax savings. One of the shareholders’ main responsibilities is to elect the company’s board of directors.

S Corporation

S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.

LLCs can have an unlimited number of members; S corps can have no more than 100 shareholders (owners). Non-U.S. citizens/residents can be members of LLCs; S corps may not have non-U.S. citizens/residents as shareholders. S corporations cannot be owned by corporations, LLCs, partnerships or many trusts.

S Corp vs C Corp – Differences & Benefits | Wolters Kluwer The C corporation is the standard (or default) corporation under IRS rules. The S corporation is a corporation that has elected a special tax status with the IRS and therefore has some tax advantages. Both business structures get their names from the parts of the Internal Revenue Code that they are taxed under.

An S corporation protects the personal assets of its shareholders. Absent an express personal guarantee, a shareholder is not personally responsible for the business debts and liabilities. Creditors cannot pursue the personal assets (house, bank accounts, etc.) of the shareholders to pay business debts.

Benefit Corporation

A benefit corporation is a for-profit corporation that considers the environment and society in addition to profit when making decisions. They are also known as “B Corps”.

Benefit corporations differ from traditional corporations in their purpose, accountability, and transparency. They are required to operate as a triple-bottom line business, considering their impact on the environment and community, while also generating profits for their shareholders.

Benefit corporations must have a beneficial social or environmental purpose and meet increased levels of accountability and transparency. 
Some examples of benefit corporations include: King Arthur, Patagonia, Kickstarter. 
When your company is a B corp, it holds you and your practices accountable for social and environmental responsibility. Consumers are increasingly interested in sustainable companies and want to be convinced of their social efforts.

Limited liability company (LLC)

A limited liability company (LLC) is a business structure that protects its owners from personal liability for its debts or liabilities. LLCs are a hybrid entity that combine the characteristics of a corporation with those of a partnership or sole proprietorship.

LLCs are designed to keep their owner’s assets separate from their business assets. This means that in the case of bankruptcy or lawsuit, the personal assets of the LLC’s owners and members are protected from any business liability. 
LLCs offer limited liability protection and pass-through taxation. This means that all profits and losses are filed through the member’s personal tax return. Generally, LLCs are required to pay a one-time filing fee as well as an annual fee. 
LLCs are a popular option when a startup chooses a business legal structure. They are flexible, giving you taxation options and flexibility in the number of owners allowed.


A nonprofit organization (NPO) is a legal entity that is organized and operated for a collective, public, or social benefit. NPOs are also known as non-profit institutions or non-business entities.

Nonprofits are different from businesses in the following ways: Profit: NPOs do not prioritize profits and are instead dedicated to promoting a social cause or advocating for a particular standpoint. Income: No part of the organization’s income is distributed to its members, directors, or officers. Donations: Donations to NPOs are tax-deductible.

 Nonprofits frequently depend on the service and commitment of volunteers as well as the labor of employees.

A non-profit organization is a group organized for purposes other than generating profit and in which no part of the organization’s income is distributed to its members, directors, or officers.

Joint venture

A joint venture is a business arrangement between two or more companies to work together on a project or service. The agreement can be structured as a separate business entity or a contract between the parties.

In a joint venture, companies typically agree to split profits. The exact terms can be negotiated between the partners, such as a 60-40 or 70-30 split. The majority partner usually has more control in decisions and earns a greater share of the profits.

Joint ventures are created on a short-term basis and mostly for short projects. They differ from mergers and acquisitions, which are long-term strategies.


Some disadvantages of a joint venture include:

  • Unclear objectives
  • Poor communication between partners
  • Different expectations from the joint venture
  • Unequal expertise and investment
  • Unequal distribution of work and resources

Some types of joint ventures include:

  • Project joint venture
  • Functional joint venture
  • Vertical joint venture
  • Horizontal joint venture

Tax treatment for Business entities

Businesses qualify for different tax treatment by the IRS, state and local tax authorities depending on the business type.

Business tax statuses include:

  • Pass-through tax status: Pass-through taxation refers to businesses that do not pay taxes on the entity level. Instead, the income passes to the owners of the business who pays personal income taxes for their share of the business.

  • Corporation tax status: This “tax status” occurs at the federal-level with the IRS, and the states adopt this status when dealing with corporate income tax. Corporations can be taxed in one of two ways: S-Corporation and C-Corporation. LLC’s can be taxed in one of four (4) ways: Disregarded, Partnership, S-Corporation and C-Corporation.

  • Nonprofit tax status: Nonprofit status is a status provided by either the state or federal government that classifies an organization as a specific type that is beneficial or charitable to individuals or communities. Nonprofits and tax-exempt entities each have benefits and disadvantages.

Know what Business type is right for you?

Your small business is one of the most important decisions you will make as an entrepreneur as it will your will be your way of doing buiness and your taxes.

Keep in mind that the partner you select could also affect your business in the long run, choose wisely who you want to accompany you in this project and make sure that you get all tools neeed to run your business like licenses and permits.

Need help registering your business or still have questions?

If you still not confortable with the type of business you want to select, we can guide you to make right decision. If you want we can help you register your business for FREE and you just pay the registration fees. Just click in the button below and we will get back to you shortly.


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