Business structures compared (2026)

How each structure is taxed and what it adds or saves. An LLC can also elect to be taxed as an S corp, which the S corporation page covers. For the yearly cost in your state, open LLC cost by state or LLC vs S corp in every state.

• Sole proprietorshipThe default for one person in business without filing anything with the state. Profit goes on Schedule C of the owner's Form 1040 and carries self-employment tax.
• Single-member LLCA company formed under state law. For federal tax a single-member LLC is disregarded: it is taxed exactly like a sole proprietorship unless it elects otherwise. It costs a state filing to form and usually a yearly report.
• S corporationA tax election, not a kind of company. An LLC or a corporation files Form 2553 and is then taxed as an S corp: the owner takes a salary with payroll tax, and the rest of the profit passes to the owner's return without self-employment tax.
• C corporationA corporation taxed on its own profit at 21% federal, plus state corporate tax. Profit paid to the owner as dividends is taxed again on the owner's return.