Your Situation → Likely Starting Point
| Your Situation | Likely Starting Point | Learn More |
|---|---|---|
| Solo, low-risk, testing an idea | Sole Proprietorship or Single-Member LLC | Sole Prop | LLC |
| Two or more founders, building revenue | LLC | LLC |
| Ready for investors, growth-stage | S Corporation | S Corp |
| Charitable / ministry / community mission | Nonprofit Corporation — 501(c)(3) | Nonprofit |
| Mission + market, values codified in law | Benefit Corporation | Hybrid Structures |
| Social enterprise + foundation funding | L3C | Hybrid Structures |
| Large-scale capitalization / venture capital / IPO | C Corporation | C Corp |
★ Highlighted rows are especially relevant for faith-based entrepreneurs. Always consult an attorney and CPA before filing.
Full Structure Comparison
| Structure | Liability Protection | Taxation | Owners | Complexity |
|---|---|---|---|---|
| Sole Proprietorship | None | Schedule C (pass-through) | 1 | Very Low |
| General Partnership | None | Form 1065 + K-1s | 2+ | Low |
| LLP | Limited partners protected | Form 1065 + K-1s | 2+ | Low–Medium |
| LLC | Strong | Flexible (Schedule C, 1065, or Corp) | 1+ | Low–Medium |
| S Corporation | Strong | Form 1120-S + K-1s (pass-through) | Up to 100 (US only) | Medium–High |
| C Corporation | Strongest | Form 1120 (double taxation) | Unlimited | High |
| Nonprofit 501(c)(3) | Strong | Tax-exempt (Form 990) | Board (no owners) | High |
| Benefit Corporation | Strong | Form 1120 or 1120-S | Unlimited | Medium–High |
| L3C | Strong | Form 1065 + K-1s | 1+ | Medium |
Not sure yet?
Work through the Four Discernment Questions to clarify your liability exposure, tax strategy, funding plan, and mission alignment before making your decision.
Always consult an attorney and CPA before filing your legal structure.
The right choice depends on your specific circumstances, state laws, and long-term vision.