An LLC is a type of hybrid business structure that provides the limited liability features of a corporation with the operational flexibility and tax advantages of a partnership. It has become a popular choice for sole proprietors who are looking to incorporate for protection of assets or to secure additional loans.

LLCs are one of the easiest and least expensive forms of ownership to organize. The Limited Liability Company is now recognized as a business structure in all 50 states and the District of Columbia. LLC owners are called members and can be individuals or other companies, including non-US citizens and non-US residents.

Like a C corporation, an LLC can have an unlimited number of owners. Like an S corporation, its profits and losses may pass directly to owners (no double taxation). For many start-up and growing businesses, the LLC may offer the best of all operating structures
 

C Corporation

The main advantage of a C corporation is that it has no limitations on the number of shareholders or classes of stock. The major disadvantage is that profits may be subject to double taxation; that is, corporate income is taxed, and then dividends paid to each stockholder are taxed as part of the individual's income. C corporations are also referred to as general corporations.

S Corporation

A corporation with subchapter S tax status is simply a general corporation that has selected a special tax status with the IRS after the corporation has been formed. The S corporation may be more appropriate for small companies that want to gain the advantages of a corporate structure without the disadvantage of double taxation. All profits are distributed on a pro rata basis to stockholder who then pay personal income taxes on them.
 

Professional Corporation or LLC

A Professional Corporation and a Professional Limited Liability Company are both a type of entity reserved for businesses that require a professional license, such as doctors, dentists, attorneys, architects or engineers. See the notes above to understand the differences between a corporation and LLC.

Nonprofit Corporation

A Nonprofit corporation is an entity type formed for purposes other than generating a profit and no part of the organization's income is distributed to its directors or officers. Examples of common nonprofit corporations are churches, schools, charities, museums, hospitals, volunteer organizations, homeless shelters and civic associations. Nonprofit corporations are formed to carry out a charitable, educational, religious, literary, or scientific purpose.

The most common federal tax exemption for nonprofits comes from Section 501(c)(3) of the Internal Revenue Code, which is why nonprofits are sometimes called 501(c)(3) corporations.