Everything You Need to Start and Grow Your Small Business

Starting a business? You'll face dozens of decisions in those early weeks, but here's one that'll follow you for years: picking your business entity. I'm not talking about choosing a catchy name or designing a logo. This decision determines whether the IRS treats you like an employee or a corporation, whether a lawsuit can seize your house, and how much paperwork lands on your desk every quarter.

Here's what I see happen constantly: someone launches a side hustle and defaults to sole proprietorship because it's automatic. Or they form an LLC because "that's what everyone does." Neither approach works. Your cousin's roofing company needs different protection than your SaaS startup. A real estate investor faces different tax math than a freelance designer.

This guide walks through every major business structure available in the US, shows you exactly how they compare (especially LLCs versus everything else), and helps you figure out which one matches your situation right now.

Understanding Business Entities

A business entity is the legal structure you select when establishing your company. It creates the framework that governs two critical aspects of your operation: your personal exposure to business obligations, and the method by which your income gets taxed.

The importance becomes clear when you examine real-world scenarios. Picture yourself operating without formal structure, and a client brings a $200,000 lawsuit against your business. If they prevail, your personal property—vehi...