Business Entities
Business entities are legal structures through which commercial activities are conducted and organized, each offering distinct liability protections, tax treatments, and ownership rules. They can range from simple, single-owner operations to complex corporations with multiple shareholders, including (but not exhausting):
- Sole Proprietorship: A simple structure owned by one person who is personally liable and reports profits on their personal tax return.
- Partnership: An arrangement where owners share profits, are personally liable, and benefit from pass-through taxation.
- LLC (Limited Liability Company): A hybrid structure offering limited personal liability, flexible management, and pass-through taxation by default.
- C Corporation (C Corp): A separate legal entity with limited liability for owners, but subject to double taxation at the corporate and shareholder levels.
- S Corporation (S Corp): A corporation with limited liability, pass-through taxation, a limit of 100 shareholders, and certain ownership restrictions.
- Nonprofit Corporation: A tax-exempt entity formed for charitable, religious, or public service purposes, where no individual is personally liable.