Business Structures: Choosing the Right Entity

---

✔ Best For: Freelancers, independent contractors, and self-employed individuals
✔ Taxation: Income reported on Schedule C (Form 1040); subject to self-employment tax
✔ Liability: No separation between personal and business assets (higher personal liability risk)

✔ Best For: Small businesses seeking liability protection and flexible taxation
✔ Taxation: Default pass-through taxation, but can elect S-Corp or C-Corp tax treatment
✔ Liability: Shields personal assets from business debts and lawsuits

✔ Best For: Business owners aiming to reduce self-employment taxes
✔ Taxation: Income passes through to owners, avoiding double taxation
✔ Payroll Requirement: Owners must pay themselves a reasonable salary before taking distributions

✔ Best For: Established businesses planning to attract investors or go public
✔ Taxation: Subject to 21% corporate tax rate + potential double taxation on dividends
✔ Liability: Strongest legal protection for owners