Business Entity Comparison Tool

Answer 7 questions and get a personalized recommendation: Sole Proprietorship, LLC, S-Corp, or C-Corp.

Advertisement
Ad Space — 728×90
Question 1 of 7
What is your estimated annual business income?
💰 Less than $30,000
Side hustle or part-time freelance income
💰 $30,000 – $80,000
Moderate income — most freelancers fall here
💰 $80,000 – $200,000
High income — S-Corp starts making sense
💰 $200,000+
C-Corp may provide additional tax planning options
Question 2 of 7
How important is personal liability protection for your business?
🛡️ Not important — low risk business
Consulting, writing, digital services with minimal risk
🛡️ Somewhat important
Would sleep better with protection
🛡️ Very important — high risk industry
Physical products, health services, construction
Question 3 of 7
Do you plan to raise outside investment?
💵 No — self-funded or bootstrapped
Using your own savings and revenue
💵 Maybe — angel or friends & family
Small investments from people you know
💵 Yes — venture capital or institutional
Seeking significant outside investment
Question 4 of 7
How many owners will the business have?
👤 Just me — solo owner
Single-member business
👥 2-10 owners
Partnership or multi-member
🏢 10+ owners / public plans
Many stakeholders or IPO path
Question 5 of 7
How important is tax optimization for your business?
🧾 Simple is fine — no complex planning needed
Report income, pay taxes, move on
🧾 Want to minimize self-employment tax
S-Corp election can save thousands
🧾 Need advanced tax strategies
Retaining earnings, deferring taxes, credits
Question 6 of 7
Do you operate or sell internationally?
🌎 No — US only
Domestic clients and customers
🌎 Yes — some international clients
Occasional cross-border work
🌎 Yes — significant global operations
Multiple countries, foreign entities
Question 7 of 7
Do you plan to hire employees?
👥 No — just me (or contractors)
Solo operation
👥 Yes — 1-10 employees planned
Small team
👥 Yes — 10+ employees planned
Scaling up significantly

Choose the Right Business Structure

One of the first big decisions every business owner faces: what legal structure should I use? The answer has major implications for your taxes, personal liability, and ability to raise money. Here is a breakdown of the four main options.

Sole Proprietorship

Best for: Low-risk solo businesses under $30K income. Pros: Free to set up, easiest taxes, full control. Cons: No liability protection, full 15.3% SE tax on all income, harder to raise investment.

LLC (Limited Liability Company)

Best for: Most small businesses earning $30K-200K. Pros: Liability protection, flexible, can elect S-Corp later. Cons: State filing fees, still pays full SE tax unless S-Corp elected.

S-Corporation (S-Corp)

Best for: Businesses earning $80K+ wanting SE tax savings. Pros: Save ~$4-6K/year on SE tax, liability protection. Cons: Payroll required, reasonable salary rules, more paperwork.

C-Corporation (C-Corp)

Best for: High-growth startups seeking VC investment. Pros: Best for investors, unlimited owners, can go public. Cons: Double taxation (corporate + dividend), highest compliance costs.

FAQ

Yes. Most businesses start as sole prop, form an LLC as they grow, then elect S-Corp status when income justifies it. You can even convert an LLC to a C-Corp later. Each step has some paperwork and costs, but it is very common.

Yes, when properly maintained. An LLC creates a legal separation between your personal and business assets. However, you need to keep separate bank accounts, sign contracts in the LLC name, and follow formalities to maintain the protection.

Filing fees range from $40 (Arizona, Iowa) to $800 (California, Massachusetts). Most states are between $100-300. You can file yourself or use a service like LegalZoom or ZenBusiness for $0-300 plus state fees.