• Sole Proprietorship: Simple to set up, but no liability protection.
• Partnership (GP, LP, LLP): Shared ownership, liability depends on type.

• LLC (Limited Liability Company): Liability protection, flexible management.
• Corporation (C-Corp or S-Corp): Strong liability protection, more complex.

• LLCs and corporations provide personal asset protection from business liabilities.
• Sole proprietorships and general partnerships do not.

• Must register with the state (LLC/corporation).
• Choose a unique name, register a registered agent, and file Articles of Organization or Incorporation.
• Draft internal governance documents (Operating Agreement, Bylaws, etc.).
• Define roles, equity ownership, and IP ownership

• Local, state, and federal licenses may be required depending on the business type and location.
• Ensure compliance with industry specific regulations and standards.

• Protect your brand and products through trademarks, copyrights, and patents.

• Comply with federal and state hiring laws and determine compensation, benefits, contracts, and non-compete agreements
• Use proper contractor and employee classifications

• Sole Proprietorships and Single-member LLCs: Pass-through taxation.
• Partnerships and Multi-member LLCs: File Form 1065; net income passes to owners to report on their returns.
• S-Corporations: Pass-through taxation with possible self-employment tax savings.
• C-Corporations: Double taxation potential (corporate and shareholder level).

• Income/franchise taxes, sales/use taxes, and gross receipts taxes vary by state.
• LLCs often at least pay annual fees or franchise taxes even if income is zero.

• Sole proprietors, partners, and LLC members typically pay self-employment tax.
• S-Corp owners can reduce this by paying themselves a “reasonable salary.”

• For instance, an EIN is required for most entity types, especially those with employees or multiple members.

• One condition is that you must register with state and federal tax authorities if hiring employees.
• Ensure proper procedures are used and records are kept from Day 1 (including owner salaries).

• Corporations and some LLCs have stricter requirements for financial records.

• Investors and Fundraising: Most corporations are typically better suited for venture capital or issuing stock.
• Startup Costs: On the other hand, up to $5,000 of startup costs can be deducted in year one, with the deduction reduced dollar-for-dollar if startup costs exceed $50,000

Note: startup costs exceeding the $5,000 must be amortized

• Research and Development: Startups with qualifying research can offset payroll taxes using the R&D credit
• Qualified Small Business Stock (QSBS): Section 1202 may allow C Corporations to exclude up to $10 million in gains on the sale of stock held for 5 years
• Exit Strategy: Entity choice can impact the ease and tax consequences of selling the business.