You’re choosing a business structure.
But you’re not sure which one fits. You see advice everywhere. But you want real examples. How did others decide?
Real examples help you decide.
Different founders. Different goals. Different structures. Different reasons.
This guide shows you four real profiles.
Their situations. Their goals. Their choices. Their reasoning. What you can learn.
Read this. See the examples. Make your choice.
Key Takeaways
- Different business structures fit different situations—solo consultants often choose LLCs for simplicity, while businesses seeking investment may choose corporations
- Tax considerations play a major role—pass-through taxation (LLC) vs. double taxation (C-Corp) vs. S-Corp election each have different implications
- Liability protection is important for all structures, but the level of formality and compliance requirements vary significantly
- Growth plans matter—businesses planning to raise capital or go public typically choose corporations, while lifestyle businesses often choose LLCs
- Your specific situation determines the best structure—consider your goals, risk level, tax situation, and growth plans when deciding
Table of Contents
Why Real Examples
Real examples show how decisions are made.
What happens if you only read theory:
- Abstract concepts
- Hard to apply to your situation
- Unclear decision-making process
- Uncertainty about choices
What happens if you see real examples:
- Concrete situations
- Easy to relate to your situation
- Clear decision-making process
- Confidence in choices
The solution: See real profiles. Understand their reasoning. Apply to your situation.
Profile 1: Solo Consultant
The Situation:
- Solo consultant
- Professional services
- Low overhead
- Moderate income
- Wants simplicity
The Goals:
- Liability protection
- Tax flexibility
- Simple compliance
- Low cost
- Easy to manage
The Choice:
- LLC with default tax treatment
- Single-member LLC
- No S-Corp election
The Reasoning:
- LLC provides liability protection
- Default tax treatment is simple (pass-through)
- Minimal compliance requirements
- Low formation and maintenance costs
- Easy to manage alone
Why It Works:
- Liability protection without complexity
- Simple tax reporting
- Low ongoing costs
- Easy to operate
What You Can Learn:
- Solo businesses often benefit from LLC simplicity
- Default tax treatment may be sufficient
- Complexity isn’t always necessary
Pro tip: Solo consultants and service providers often find LLCs provide the right balance of protection and simplicity. See our entity type decision tree for guidance.
Profile 2: Tech Startup
The Situation:
- Tech startup
- Multiple founders
- Seeking investment
- High growth potential
- Planning for exit
The Goals:
- Investor-friendly structure
- Ability to raise capital
- Stock options for employees
- Exit strategy flexibility
- Professional credibility
The Choice:
- C-Corporation
- Delaware incorporation
- Standard corporate structure
The Reasoning:
- Corporations are investor-friendly
- Can issue stock and stock options
- Familiar structure for VCs
- Delaware is standard for startups
- Supports exit strategies (IPO, acquisition)
Why It Works:
- Investors prefer corporations
- Stock structure supports growth
- Professional credibility
- Exit strategy flexibility
What You Can Learn:
- Investment-seeking businesses need corporations
- Stock structure enables growth
- Professional structure matters to investors
Pro tip: Businesses seeking investment typically need corporations. The added complexity is worth it for access to capital. See our entity type decision tree for guidance.
Profile 3: Service Business
The Situation:
- Service business
- Two partners
- Moderate profits
- Consistent income
- Wants tax savings
The Goals:
- Liability protection
- Tax optimization
- Partnership flexibility
- Reasonable compliance
- Cost-effective structure
The Choice:
- Multi-member LLC
- S-Corp election
- Partnership-style management
The Reasoning:
- LLC provides liability protection
- S-Corp election saves self-employment taxes
- Profits justify S-Corp complexity
- Partnership flexibility in management
- Cost-effective for two owners
Why It Works:
- Liability protection for both partners
- Tax savings from S-Corp election
- Flexible management structure
- Reasonable compliance burden
What You Can Learn:
- Multi-owner businesses can benefit from S-Corp elections
- Tax savings justify added complexity
- Partnership flexibility is valuable
Pro tip: Multi-owner businesses with significant profits often benefit from S-Corp elections. See our S-Corp guide for when it makes sense.
Profile 4: Lifestyle Business
The Situation:
- Lifestyle business
- Solo founder
- Moderate income
- Wants flexibility
- Values simplicity
The Goals:
- Liability protection
- Tax simplicity
- Low compliance burden
- Flexibility to change
- Low cost
The Choice:
- Single-member LLC
- Default tax treatment
- Simple structure
The Reasoning:
- LLC provides liability protection
- Default tax treatment is simple
- Minimal compliance requirements
- Easy to change later if needed
- Low formation and maintenance costs
Why It Works:
- Liability protection without complexity
- Simple tax reporting
- Low ongoing costs
- Flexibility for future changes
What You Can Learn:
- Lifestyle businesses benefit from simplicity
- Default structures often work well
- You can change structure later if needed
Pro tip: Lifestyle businesses often don’t need complex structures. Simple LLCs provide protection without unnecessary complexity. See our entity type decision tree for guidance.
Key Takeaways
Here’s what these profiles teach us:
Structure Matches Situation
What it means:
- Different situations need different structures
- No one-size-fits-all solution
- Your goals determine your structure
Why it matters: Choosing the right structure requires understanding your situation.
Goals Drive Decisions
What it means:
- Investment goals → Corporation
- Tax savings goals → S-Corp election
- Simplicity goals → Default LLC
- Flexibility goals → LLC structure
Why it matters: Clear goals lead to clear structure choices.
Complexity Has a Cost
What it means:
- Corporations add complexity
- S-Corp elections add compliance
- Simple structures are easier
- Complexity must be justified
Why it matters: Only add complexity when benefits justify costs.
You Can Change Later
What it means:
- Structures can be changed
- Start simple, add complexity later
- Don’t over-engineer initially
- Adapt as business grows
Why it matters: You don’t have to get it perfect from day one.
Pro tip: These profiles show common patterns. Use them as reference points, but make decisions based on your specific situation.
How to Apply
Use these profiles to guide your decision:
Step 1: Identify Your Profile
What to do:
- Review the four profiles
- Identify which one matches your situation
- Note similarities and differences
- Understand their reasoning
Why it matters: Matching profiles helps you see relevant examples.
Step 2: Assess Your Goals
What to do:
- List your business goals
- Identify priorities
- Consider growth plans
- Think about tax situation
Why it matters: Clear goals guide structure choice.
Step 3: Consider Your Situation
What to do:
- Assess your risk level
- Evaluate profit potential
- Consider compliance capacity
- Think about future plans
Why it matters: Your situation determines what structure works.
Step 4: Make Your Choice
What to do:
- Compare your situation to profiles
- Consider your goals
- Evaluate complexity vs. benefits
- Choose structure
Why it matters: Informed decisions lead to better outcomes.
Pro tip: Use these profiles as starting points. Then use our entity type decision tree for detailed guidance.
Your Next Steps
Review the profiles. Assess your situation. Make your choice.
This Week:
- Review these four profiles
- Identify which profile matches your situation
- Assess your business goals
- Consider your specific needs
This Month:
- Use decision framework
- Consult with professionals if needed
- Make your structure choice
- Form your business entity
Going Forward:
- Monitor your business situation
- Reassess structure as business grows
- Adjust structure if goals change
- Stay compliant with requirements
Need help? Check out our entity type decision tree for detailed guidance, our S-Corp guide for tax election decisions, and our compliance guide for ongoing requirements.
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Sources & Additional Information
These profiles are illustrative examples based on common business scenarios. Your specific situation may differ.
For detailed entity selection guidance, see our Entity Type Decision Tree.
For S-Corp election guidance, see our S-Corp Guide.
For compliance requirements, see our Compliance Guide.
