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Your choice of business structure will largely determine how your business income will be taxed. Along with naming your company, deciding which entity your business should become is one of the first decisions you'll ever make.

State governments in the U.S. recognize more than a dozen different types of business entities, but the average small business owner chooses between these six: sole proprietorship, general partnership, limited partnership, limited liability company, C corporation and S corporation.

Forms of Business OrganizationSole Proprietorship. A sole proprietorship is a business owned by only one person.Partnership. A partnership is owned by two or more persons who contribute capital to conduct business.Corporation.

The following are some of the important factors business owners should consider when selecting a form of ownership.Cost of Start-up.Control vs.Profitsto Share or Not to Share.Taxation.Entrepreneurial Ability.Risk Tolerance.Financing.Continuity and Transferability.

All businesses must adopt some legal configuration that defines the rights and liabilities of participants in the business's ownership, control, personal liability, lifespan and financial structure. The form of business determines which income tax return form to file and the company's and owner's legal liabilities.

How to choose the right business structure for your business?Number of Owners. Your options are filtered with this point.Level of liability and personal risk.Control over business decisions.Ability to raise or borrow money.Registration and maintenance costs.Credibility.Continuity of existence.Taxation Structure.More items...?

An LLC is a legal entity only and must choose to pay tax either as an S Corp, C Corp, Partnership, or Sole Proprietorship. Therefore, for tax purposes, an LLC can be an S Corp, so there is really no difference.