My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

Franchises

Which business entity is best if I'm starting a business that could potentially become a franchise?

min read
Opinions expressed by Entrepreneur contributors are their own.
Either one should be fine.

The choice between these two types of entities is really more about taxes than about any other factor. An LLC is taxed like an S corporation in that any taxable income from the entity is passed on to the owners via an informational return and so each owner pays personal income taxes on the amount of the LLC income that they get.

In the case of a C corporation, the corporation itself files an income tax return and pays all corporate taxes. If you want to get the balance of the after tax income out of a C corporation and into your pocket personally, you have to distribute it as dividends which are subject to personal income taxes as well. Most people set up their entities as either LLCs or S corporations in order to avoid this double taxation of their earnings.

As far as the other main reason to use one of these entities, to create personal liability protection, any of the three options discussed should be equally effective.

More from Entrepreneur

New York Times bestselling author Nicole Lapin can help you pitch your brand to press and strengthen your media training.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.

Latest on Entrepreneur