Choosing the Right Business Entity — LLC, S-Corp, or Sole Proprietor?

Thinking about expanding, reorganizing or starting a business? One of the first and most important decisions you’ll make is how to structure it.

Choice of entity impacts the taxes you will pay, what you will be able to deduct, how and who you can partner with and the flexibility you have in compensation from the business. At James D Miller, CPA, we guide entrepreneurs, both established and new, through these crucial decisions so you don’t box yourself into a bad decision later.

What Is a Business Entity?

A business entity is the legal structure of your company. Common options include:

Sole Proprietorship: Easy to start, can be transitioned into a more advantageous business form later, no liability protection.
Limited Liability Company (LLC): Flexible and protects personal assets
S-Corporation (S-Corp): Potential tax savings, but more formal requirements
C-Corporation (C-Corp): Allows better access to deductible benefits and more flexible capital structure
Partnership: Ideal for businesses with two or more owners but provides no liability protection

Each comes with different rules, tax treatments, and paperwork. Choosing the wrong one can cost you in taxes, liability exposure, or missed opportunities.

Key Questions to Ask

Do you want to protect your personal assets?
Will you have employees.
Will you be adding owners or partners?
Are you planning to raise capital?
I self employment tax a concern for you?
Would you like to use your business to fund retirement savings?
Would you like to use your business entity to provide deductible benefits?

Our Business Formation Services Include:

Entity type consultation
State registration and EIN setup
IRS elections (such as S-Corp status)
Ongoing compliance support and tax guidance

We also help with conversions—if you’re currently a sole proprietor and want to switch to an LLC or S-Corp, we’ve got you covered.

Starting a business is exciting—don’t let paperwork slow you down. Contact James D Miller, CPA for a formation consultation and set your business up for success.