Business Entities in the US

Business Entities in the US

There are many types of business entities in the United States for two reasons. First, there is no federal registration. Each state authorizes legal entities by statute and common law. These tables summarize the various business entities and key terms for each.

Second, a complex tax code creates a level of variation for most types of legal entities. For example C Corporations and S Corporations are both corporations under state law, but each takes advantage of different subchapters of the tax code.

Business Entity Types

There are four broad categories of business or legal entities in the United States. This table shows terms generally used for owners and management of each type of legal entity.

Types of Business Entities in the United States

EntityOwnersManagement
CorporationShareholdersOfficers & Directors
Limited Liability CompanyMembersManagers
PartnershipPartnersPartners
Sole ProprietorshipProprietorProprietor

Details for corporations, LLCs, and partnerships are available below.

Types of Corporations

The corporate form is flexible. These are five of the more common type of corporations from a tax code perspective.

Types of Corporations in the United States

Type of CorporationLiability ProtectionTax Status
C CorporationEntityTaxable
S CorporationEntityPass through
Non-ProfitEntityN/A
Benefit CorporationEntityTaxable
Professional CorporationLimitedTaxable

Non-Profits are typically organized under 501(c)(3) of the Internal Revenue Code for tax purposes. There are many other types of non-profit tax registrations.

The Professional Corporation designation is not a product of the tax code. It is a create of state law. Not all states authorize Professional Corporations.

Types of Limited Liability Companies

Limited liability companies are products of state law. Most states have adopted a form of the Uniform Limited Liability Company Act.

Types of LLCs in the United States

Type of LLCLiability ProtectionTax StatusOwner-Manager Separation
Member ManagedEntityPass throughCombined
Manager ManagedEntityPass throughSeparate
Professional LLCLimitedPass throughVaries

The LLC is also a flexible legal form. Smaller LLCs often use the Member Managed form where the members also run the business as officers. Manager Managed LLCs separate oversight by owners (members) and operations (managers).

LLCs can also opt to be taxed like a corporation with entity level taxation, but this is not typical.

Many LLCs adoption the nomenclature of corporations, such as a Board of Directors and officers.

Some states authorize a master LLC form called a Series LLCs.

Types of Partnership

Generally (pun intended), partnerships are unincorporated business entities. There are several forms of partnership governed both by common law and statue.

Types of Partnerships in the United States

Type of PartnershipAbbreviationLiability
General PartnershipGPAll Partners
Limited PartnershipLPOnly General Partner
Limited Liability PartnershipLLPLimited, like LLC
Limited Liability Limited PartnershipLLLPGeneral Partner has limited liability

The LLLP (or triple LP) is much less common than other forms of partnership. Partnerships benefit from pass through tax status.

Conclusion

For a detailed discussion of business entities see our analysis of 30 years of data about business entity incorporation.