Starting a business in the U.S. involves making several critical decisions, and one of the most important is choosing the right business entity. This choice will affect your personal liability, how your business is taxed, and how your company is regulated. In short, it will shape how your business operates from day one.
Understanding the different types of business entities is essential for entrepreneurs and investors who want to build a solid foundation for growth, protect themselves legally, and ensure compliance with U.S. regulations.
Below is a practical guide to the most common types of business structures in the U.S.
Sole Proprietorship
The simplest form of business, a sole proprietorship is owned by a single individual. No separate legal entity exists, meaning there’s no distinction between personal and business assets and liabilities. While easy to set up, this structure offers no personal liability protection.
Partnership (LP & LLP)
A partnership involves two or more people owning a business together.
Limited Partnership (LP): One partner has unlimited liability, while the others have limited liability and control.
Limited Liability Partnership (LLP): Provides limited liability protection to all partners, making it less risky for everyone involved.
Limited Liability Company (LLC)
An LLC blends the benefits of corporations and partnerships. Owners are protected from personal liability, and profits can bypass corporate tax rates. Many entrepreneurs choose LLCs for their flexibility, though some states impose limitations on their duration.
Corporations
There are several forms of corporations, each serving different purposes:
C Corporation (C corp): A separate legal entity from its owners. Offers the highest level of liability protection and the ability to raise capital through stocks. However, C corps are more costly to establish and face double taxation.
S Corporation (S corp): Avoids double taxation by allowing profits to flow directly to shareholders’ income. Approval from the IRS is required to qualify.
B Corporation (B corp): For-profit entities that balance purpose and profit. They must generate public benefit alongside financial returns.
Close Corporation: Typically small, not publicly traded, and often run by a small group of shareholders rather than a board of directors.
Nonprofit Corporation: Operates for public or charitable purposes and enjoys tax-exempt status from the IRS. Must follow organizational rules similar to a C corp.
Cooperative: Owned and operated by members who use its services, with profits shared among members.
How to Choose the Right Business Entity
Selecting the right structure will impact your liability, taxes, compliance obligations, and even your ability to qualify for certain visas. What works for one business owner may not be right for you.
That’s why it’s important to evaluate your options carefully. For example, the most tax-efficient setup might not align with visa requirements if you are pursuing an immigration strategy.
How We Can Help
At Visa Business Plans, we don’t just guide you through the differences between business entities, we help you set your company up the right way from the start. Our team assists with:
Registering your business entity
Obtaining your EIN (Employer Identification Number)
Connecting you with ancillary services to ensure your company complies with both U.S. business and immigration requirements
With over 15 years of experience supporting entrepreneurs and investors, we understand how to align your business structure with your short- and long-term goals.
If you’re ready to start a business in the U.S., contact us today to see how we can help you get your entity registered and operational with confidence.
Contact us today to get started
The information provided in this blog is intended solely for informational purposes. While we strive to offer accurate and up-to-date content, it should not be considered legal advice. Immigration laws and regulations are subject to change, and individual circumstances can vary widely. For personalized guidance and legal advice regarding your specific immigration situation, we strongly recommend consulting with a qualified immigration attorney who can provide you with tailored assistance and ensure compliance with current laws and regulations.
Visa Business Plans is led by Marco Scanu, a certified coach from the University of Miami with a globally-based practice coaching Fortune 1000 company executives, entrepreneurs, as well as professionals in four different continents. Mr. Scanu advises clients on turnaround strategies and crisis management.
Mr. Scanu received a bachelor’s degree in Business Administration (Cum Laude) from the University of Florida and an MBA in Management from Bocconi University in Milan, Italy. Mr. Scanu was also a Visiting Scholar at Michigan State University under the prestigious H. Humphrey Fellowship (Fulbright program) with a focus on Entrepreneurship, Venture Capital, and high-growth enterprises.
At present, Mr. Scanu is the managing partner and CEO at Visa Business Plans, a Miami-based boutique consulting firm providing attorneys and investors with business planning services in the areas of U.S. and Canadian immigration, SBA loans, and others.
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