Three key considerations in choosing a business structure type are the availability of personal liability shield, taxation, and management or control by owners.

In terms of “personal liability shield”, shareholders of a corporation generally are not held personally liable under the “corporate veil” for unpaid debts or obligations of the business in a corporation. However, if there are instances of fraud, co-mingling of assets, undercapitalization of the business or failure to abide by corporate formalities, then the shareholders may be held personally liable for any unpaid debts of the business.

As for “taxation”, “pass-through” taxation avoids double taxation, and profit is only taxed at the individual owner level, such as shareholders’ level in a corporation. This type of pass-through taxation is typically available in a S corporation and Limited Liability Company (LLC).

Lastly, it is important to consider what level of control by owners is available. In a corporation structure, control is typically vested in the Board of Directors; whereas in a LLC, selection can be made to vest control in the owners (members).