The simplest and least expensive business structure to start — ideal for freelancers, consultants, and independent contractors testing a business idea.
The simplest and least expensive business structure to start — ideal for freelancers, consultants, and independent contractors testing a business idea.
A Sole Proprietorship is the simplest business structure — owned and operated by one person with no legal separation between owner and business. There is no formal registration process, no filing fees, and no ongoing compliance requirements at the state level. However, the owner is personally liable for all business debts and obligations. Sole proprietors report business income on their personal tax returns using Schedule C.
Sole proprietors report all business income and expenses on Schedule C attached to their personal Form 1040 tax return. Net profit is subject to self-employment tax (15.3% for Social Security and Medicare). Business losses can offset other personal income. Sole proprietors must make quarterly estimated tax payments.
Business income reported on Schedule C with personal Form 1040. Subject to self-employment tax on net earnings. Quarterly estimated tax payments required.
| Structure | Liability Protection | Tax Framework | Complexity | Ownership Type | Primary Use Case |
|---|---|---|---|---|---|
| C Corporation | Full | Double (Corporate + Personal) | Complex | Shareholders (unlimited) | Venture capital-funded startups & large enterprises |
| Corporation | Limited | Pass-through | Moderate | Members | Various |
| DBA | None (depends on entity) | Same as underlying entity | Minimal | Same as underlying entity | Businesses wanting multiple brand identities |
| LP | Limited (for limited partners only) | Pass-through | Moderate | General + Limited Partners | Real estate & investment funds |
| LLC | Limited | Pass-through | Simple | Members (unlimited) | Small business owners seeking liability protection |
| LLP | Partial (partner-to-partner) | Pass-through | Moderate | Partners | Professional service firms |
| Nonprofit | Limited (for directors) | Tax-exempt (501c3) | Complex | No owners — board governed | Charitable & mission-driven organizations |
| PLLC | Limited (varies by state) | Pass-through | Moderate | Licensed professionals only | Doctors, lawyers, accountants & architects |
| S Corporation | Full | Pass-through (S Corp election) | Moderate | Shareholders (max 100, US only) | Established businesses wanting tax savings |
| Sole Proprietorship | None | Personal (Schedule C) | Minimal | Single owner | Freelancers, consultants & sole traders |
Form your business using streamlined processing pipelines, real-time documentation tracking, and compliance guides configured for your state.