Business License
Starting Your New Business
Before diving into the exciting world of entrepreneurship, it’s crucial to understand the distinctions between an LLC, DBA, and Corporation. We’re here to guide you through the process when you’re ready to embark on this journey.
LLC (Limited Liability Company)
- Optimal for maximum flexibility in business management.
- Unlimited owners allowed.
- Personal liability protection – you’re not personally responsible for business liabilities.
DBA (Doing Business As):
- Ideal for those wanting to operate under a different business name without forming a new company.
- Common among sole proprietors for easy setup.
- Note: Personal liability for business liabilities.
S-Corp or C-Corp:
- S-Corp: Avoid double taxation by paying taxes only on your personal income.
- Requires a minimum of 2 partners and/or shareholders.
Frequently Asked Questions (FAQs)
Both protect owners so they’re not personally on the hook for small business tax service liabilities or debts. But, key differences include how they’re owned (LLCs have one or more individual owners and corporations have shareholders) and maintained (corporations generally have more formal record-keeping and reporting requirements). Even though LLCs are considered easier to start and maintain, investors tend to prefer corporations.
LLCs, S corporations, and sole proprietorships are taxed once on profits received. C corporations are taxed twice; the business pays taxes at the corporate level, and shareholders pay taxes on income received.