Free 60-Minute Risk List Session

7 Business Structures Built To Scale

Structure Criteria ▪ Liability ▪ Taxes ▪ Growth Paths

A Fast But Crucial Decision

The business structure you choose affects everything from how you pay taxes to how much personal risk you carry. It's a decision that should be made quickly but carefully. More than 70% of U.S. businesses start as sole proprietorships, though many later restructure to reduce liability and gain tax advantages (IRS).

Answers 5 Important Questions

Which structures protect me from personal liability?
How do taxes shift with each structure?
Which options make funding and partnerships easier?
How are nonprofits and benefit corporations different?
What signs show it is time to change or upgrade my structure?

"Nothing is certain but death and taxes."

— Jennifer Lynn Barnes

Business Structure Criteria

Choosing a structure is not just about filing paperwork. It sets the rules for ownership, liability, and taxes. Nearly half of small business owners regret not securing stronger protections early (U.S. SBA).

Ownership

Defines how many people can legally own the business.
Some require owners to be U.S. citizens or residents.
Ownership and daily management can differ, especially in corporations.

Liability

Determines who is responsible for debts and lawsuits.
Sole proprietors and general partners have unlimited liability.
LLCs and corporations shield owners except in cases of fraud or negligence.

Taxes

Shapes how income is reported and taxed.
Sole proprietors and partnerships report income on personal returns.
Corporations pay corporate taxes, but may unlock deductions and reinvestment advantages.

"You cannot propose mutually beneficial business relationships if you do not understand business."

— Craig Rosenberg

Selecting The Best Business Structure

The structure you choose sets the foundation for taxes, liability, and growth. Reviewing your structure regularly ensures your business does not outgrow its foundation.

Basic Business Structures

Simple, low-cost structures are easy to start but come with higher personal risk. Nearly 80% of sole proprietors stay unincorporated despite unlimited liability (U.S. SBA).

Sole Proprietorship

Owned by 1 person, simple and inexpensive to set up.
Unlimited liability, meaning personal assets are exposed.
Profits are taxed as personal income.

Partnerships

Owned by 2 or more people under a legal agreement.
General partners carry unlimited liability; limited partners are only liable for their investment.
Profits pass through to personal income taxes.

Flexible Structures With Protection

Some structures balance simplicity with liability shields. These are often the next step once a business starts to grow. Over 35% of small businesses choose LLCs for their mix of protection and simplicity (IRS).

Limited Liability Company (LLC)

Owned by 1 or more members with fewer formalities than corporations.
Members are not personally liable unless they commit fraud, co-sign debt, or mix finances.
Profits are taxed as personal income by default, but can elect corporate taxation.

Nonprofit Corporation

Formed for charitable, educational, or religious purposes.
Directors and officers are not personally liable unless negligent.
Eligible for tax-exempt status; profits must be reinvested in the mission.

Corporations Structures Built To Scale

Corporations are designed for growth, investment, and long-term stability. While only 18% of U.S. businesses are corporations, they generate most of the nation's revenue (U.S. Census Bureau).

Corporation (C Corp)

Unlimited shareholders and easier to raise capital through stock.
Strong liability protection for shareholders.
Double taxation: corporate tax plus personal tax on dividends.

Corporation (S Corp)

Up to 100 shareholders who must be U.S. citizens or residents.
Pass-through taxation avoids double taxation.
Shareholders are not personally liable unless they guarantee obligations.

Corporation (B Corp)

For-profit with a legal obligation to balance profit and social/environmental mission.
Shareholders shielded from personal liability.
Taxed at the corporate level.

"You can't improve what you don't understand."

— W. Edwards Deming

Apply New Insights Now

Your business structure is more than legal paperwork, it's the framework that supports every financial and operational decision you'll make. The right structure balances protection, taxes, and flexibility as you grow.

Select Your Structure

This exercise helps you align your goals with the foundation that fits them best. Gather key decision-makers or advisors before you begin. A CPA or business attorney can offer valuable perspective.

Activity Instructions

List your top 3 business goals (e.g., protect assets, attract investors, reduce taxes).
Match each goal to 1 or more business structures (Sole Proprietorship, Partnership, LLC, S Corp, C Corp, B Corp, Nonprofit).
Identify 1 tradeoff or limitation for each structure (e.g., double taxation, complex filings, limited funding).
Circle the structure that aligns best with your near-term growth strategy.
Schedule a 30-minute consultation with a tax or legal professional to validate your choice.

Get Your Paperwork In Order

Structure defines strategy. Businesses that revisit their legal and tax foundations every few years scale faster and face fewer setbacks. Choose the structure that matches your ambition, protects your progress, and positions you for the next level of growth. Then establish it immediately.

Reflection Questions

Does your current structure protect both your assets and your growth potential?
Are you paying more in taxes than you should due to your setup?
What would it take to convert to a more flexible or protective structure?
How does your structure support or limit partnerships and funding?

"The best structure matches your ambition and protects your future."

— Nathan Rafter

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