A sole proprietor or individual is a person doing business as an organization. The person is not separate from the company and the company is not incorporated or registered with the state as an LLC or corporation. As a sole proprietor, the business does not exist separately from the owner. As a sole proprietary, you report business income on individual tax returns.

LLC or Limited Liability Company can be owned by one or more people and can be filed as a single-member LLC or a multi-member LLC. LLCs have several advantages that a limited liability structure works to protect you from lawsuits, double taxation, and reduces personal obligations and paperwork over corporations. This is the most popular and an ideal situation for most business owners.

Corporations are legal entities established by charter with certain legal rights, powers, privileges, and liabilities. A C-Corporation is a company owned by shareholders with a board of directors, who decide how the company is run. Corporations represent their own entities and can be sued, maintain financial liability, and pay their own income tax. C-Corps pay their own tax rate, which is 21%.

Corporations are legal entities established by charter with certain legal rights, powers, privileges, and liabilities. An S-Corporation is not a business type but rather a tax-filing option. Filing as an S-Corporation means that any corporate income, losses, deductions, or credits are not taxed as corporate income but are instead passed through to shareholders, where they are reported as personal income.

Partnerships and Joint Ventures are mandatory for anyone starting an organization with partner(s) Partnership: You create a shared business, which remains the property of all respective founders for the duration of the business unless assets or rights are bought/sold/traded to another member. Partnerships are ideal when you have a straightforward desire to start a business with another person or persons for the long-term. Joint Venture: A partner temporarily owns part of the company, typically for the purpose of launching a new organization, providing resources that otherwise wouldn’t be available, or achieving another clearly stated limited-time purpose. Rather than taking a loan, you share profit and loss for a period with the partner.

An estate is a legal entity designed to protect a person’s assets such as real-estate, personal property, and funds after their death. Estates pay debts and distribute assets to the beneficiaries of the estate.

Non-profits include charities and various associations such as public charities, private foundations, employee’s associations, veterans’ organizations, business leagues, state-chartered credit unions, child-care organizations, retirement fund associations, and much more. These organizations must operate on a not-for-profit basis with a defined goal and mission statement. Organizations including corporations, trusts, LLC, and unincorporated associations can choose to register for tax-exempt status. Sole-proprietorships and partnerships or joint ventures cannot.

Personal Service Corporations must have already filed as a C-Corp or S-Corp and have met conditions over the previous tax year. Personal Service Corporations are required to perform personal service activities as their principle activity over the last tax year (starting on the first day of the tax year and ending on the last day of the tax year or the last day of the calendar year in which the tax year begins).

Religious structures including temples, mosques, churches, houses of worship, and other organizations for religious-only purposes can file for tax-free status. To qualify, your organization must be part of a recognized organizes religion, have a mission statement, and be formally organized as a distinct legal entity.

Trusts are legal entities created under state law and taxed under federal law. Trusts can be used similarly to estates in that they can protect the assets of an individual after their death and hold them in order to perform an act or a series of acts. Here, trusts typically have more acting power and can invest, deny distribution to beneficiaries if conditions are not met, and maintain as a legal entity until acts or objectives are met.