Choosing the Right Business Structure: LLC vs. S-Corp vs. C-Corp vs. Sole Proprietorship vs. DBA
- Oct 3
- 3 min read
Starting a business is exciting—but let’s be real, the legal side can feel like alphabet soup. LLC? S-Corp? C-Corp? DBA? Sole prop? 🤯 Choosing the right business structure is one of the most important decisions you’ll make because it impacts how you get paid, how you pay taxes, and even how fundable your business will be. In this blog, we’ll break it down in plain language (no lawyer jargon) so you can choose the structure that fits your goals.
1. Sole Proprietorship
What it is: The simplest form of business—you and the business are the same legal entity.
Pros: Easy, inexpensive, full control.
Cons: No liability protection (if your business gets sued, so do you). Difficult to build business credit.
Best for: Freelancers, side hustlers, or testing an idea before going bigger.
2. DBA (Doing Business As)
What it is: Not a structure but a nickname for your business. You’re still a sole prop or partnership, but you file a DBA so you can operate under a brand name.
Pros: Allows you to brand your business without forming an LLC.
Cons: Still no liability protection, still taxed as a sole prop.
Best for: Testing a brand idea before committing to an LLC or Corp.
3. LLC (Limited Liability Company)
What it is: A legal entity that separates your personal and business assets.
Pros: Liability protection, flexible taxation (can be taxed as sole prop, partnership, or S-Corp), easier to build business credit.
Cons: Annual fees (depending on your state). More paperwork than sole prop.
Best for: Entrepreneurs ready to protect themselves and start building credibility with banks, lenders, and vendors.
4. S-Corporation (S-Corp)
What it is: A tax designation, not a business type. An LLC or C-Corp can elect to be taxed as an S-Corp.
Pros: Helps you save on self-employment taxes by splitting income into salary + distributions. Attractive to lenders.
Cons: Stricter IRS rules, payroll required, not available in all states.
Best for: Businesses making consistent profit ($40K–$60K+ annually) who want tax savings.
5. C-Corporation (C-Corp)
What it is: A completely separate legal entity. The company itself pays taxes.
Pros: Great for raising investor money, issuing stock, unlimited growth potential.
Cons: Double taxation (company + personal). More expensive to maintain.
Best for: Large companies, startups planning to scale nationally or attract investors.
When Should You Switch?
Sole Prop → LLC: As soon as you’re making money and want to protect your personal assets.
LLC → S-Corp: When your profit is consistent ($40K–$60K+), and you want to reduce self-employment taxes.
LLC → C-Corp: If you’re looking for investors, issuing stock, or planning big expansions.
DBA → LLC/Corp: Once your brand is solid and you’re ready to separate personal from business legally.
Who Should You Hire?
Attorney: For legal setup, especially if you’re switching structures or have partners.
CPA/Accountant: For tax strategy and deciding between LLC/S-Corp/C-Corp.
Business Coach (👋🏽 Coach Tina): To structure your business in a fundable way and align with your funding goals.
Resources
Choosing the right structure isn’t just about taxes—it’s about setting up your business for funding, growth, and longevity. If you’re ready to stop guessing and start building a fundable business, book a Power Strategy Session or join our 4-Week Mentorship starting November 1st.
📌 Spots are limited—don’t wait to make the wrong structure decision cost you thousands later.
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