Understanding C Corp, S Corp, LLC and DBA Business Structures
Whether you've purchased an existing business or want to start a new company, you must first decide which company type (also known as “business structure” or "business entity") is best for you.
A DBA filing (doing business
A corporation or LLC can also file a DBA to transact business under a name different from the one registered with the state (when the business was incorporated). For example, a corporation formed as Smith and Sons, Inc. may want to do business under a name that more clearly states what the company does and could file a DBA to use a more descriptive name like Smith Landscaping.
To incorporate your business as a C corporation, S corporation or LLC, formation documents—Articles of Incorporation for corporations and Articles of Organization for LLCs—must be filed with the appropriate state agency. Incorporating helps protect personal assets, while sole proprietorships and partnerships that use a DBA incur unlimited liability.
To formalize your organization,
A corporation is a separate legal entity set up under state law that protects
A C corporation might be the right business type for you if you:
Once you’ve incorporated, you can elect S corporation status by filing a form with the IRS and with your state, if applicable, so that profits, losses and other tax items pass through the corporation to you and are reported on your personal tax return (the S corporation does not pay tax).
An S corporation might be the right business type for you if:
Another business type that is formed under state law and gives you personal liability protection is the LLC. Tax-wise, an LLC is similar to an S corporation (or S corp), with business income and expenses reported on your personal tax return. If you are the only owner of an LLC, you are viewed as a “disregarded” entity. This means you report the LLC’s income and expenses on Schedule C of Form 1040─the same schedule used by sole proprietors
C corporations, S corporations
Most people opt to incorporate or form an LLC in the state in which their business operates. However, you are not required to do so; you can choose from any one of the 50 states or the District of Columbia (DC). You may want to consider which state is right for you to weigh any potential advantages or disadvantages. Remember, if you incorporate in a state other than the state where you operate your business, you may be required to register to transact business (foreign qualify) in the state where you operate, which results in paying registration and ongoing fees/taxes to both the state of incorporation and state of qualification.
The decision to file a DBA or form a corporation or LLC depends on your particular business, situation
For questions regarding your specific situation, consider talking with an attorney or accountant.
As you decide which business structure is best for you, try our Incorporation Wizard to compare multiple business types by multiple key considerations.
Start your business with confidence. We offer various incorporation packages to get your business up and running. Starting from $99 and includes 6 months FREE Registered Agent services.