What type/format of business should I start?

Posted by Barry L. BrewingtonNov 01, 20220 Comments

Starting your business is an exciting time in your life. However, before you can get the ball rolling, you need to determine what type of business you should start. There are multiple business entities you can choose from, each with their own advantages and disadvantages. 

With help from a small business lawyer, you can analyze your options further after reviewing the specific details of your case. Here's more about the types of business entities you can choose from, as well as some of the pros and cons of each format.

Types of Business Entities

There are several potential business entities that could be suited for your new business venture:

Sole Proprietorship

Choosing to go with a sole proprietorship may be in your best interests if you want to maintain complete control of your business. You are automatically considered a sole proprietorship even if you do not register your business.

With sole proprietorships, there is no separate business entity. Your business assets and liabilities will not be separate from your personal assets and liabilities. This means you may be legally liable and held personally responsible to pay for your business debts and other obligations.


When two or more parties are coming together to form a business, they may opt for a partnership. There are two primary kinds of partnerships, limited partnerships (LP) and limited liability partnership (LLP).

With limited partnerships, only one partner has unlimited liability while the other partners retain limited liability. Partners retaining limited liability will have limited control over the company and profits are passed through the general partners without limited liability. 

Alternatively, limited liability partnerships allow all owners to retain limited liability, and all partners are protected against debts incurred by the partnership. Regardless of whether a partner has unlimited liability or limited liability, partnerships carry risk for each partner because each partner may be legally liable and held personally responsible to pay for the partnership's debts and other obligations.

Limited Liability Company (LLC)

Limited liability companies (LLC) allow you to take advantage of the benefits offered by corporations and partnership business entities. Here, you are protected from personal liability if your LLC faces legal action. This is because your personal assets will be separated from your business assets.

Your company's profits and losses will be passed through to your personal income, allowing you to avoid facing corporate taxes. LLC members are still required to pay self-employment taxes. LLCs can operate as sole-members, partnerships or corporations. 


There are multiple corporation entities you can choose from, including:

  • C corp – With a C corp, you are separate from your corporation. Your corporation will be taxed and can earn a profit. C corps can be held liable in lawsuits. Corporations pay income tax on the profits their business earns.
  • S corp – S corps allow some losses and profits to be passed through the business owners personal income without being subjected to corporate taxes. Instead of registering with the state, you will file with the IRS to get your S corp status.
  • B corp – B corps, also commonly referred to as benefit corporations, are for-profit. Shareholders hold the company responsible for benefiting the public in some way in addition to turning a profit.

Choosing Your Business Structure 

Selecting the right business structure can be challenging. Generally, going with an LLC may be in your best interests due to the simplicity regarding liability protection and taxes. LLCs are also less formal and carry less of a hassle in comparison to corporations.

By going with an LLC, you can hedge the risk and protect your personal assets from exposure as you grow or expand. However, speaking with a small business lawyer is the only way to ensure your operating agreements are in order and tax considerations are taken into account when forming your business structure.

Contact a Small Business Lawyer for Help

Working with a small business attorney may be the best way to figure out which business entity is best suited for your professional needs. Get help drafting your LLC or Corporation when you purchase the LLC or Corporation formation on We answer questions by phone, on your portal, email or through our quick contact form.  

Remember, every document comes with free legal advice from an experienced, business law attorney.