Which are the most popular entities for small business owners?

Before the advent of the LLC; the corporation was the only practical entity for the small business owner. The choice was then between the S corporation and the C corporation. Now the LLC is the third option. Most small business owners, in the past, elected the S corporation over the C corporation because the S corporation is taxed as a proprietorship or partnership so the profits or losses would flow directly to its stockholders. Larger corporations normally select the C corporation because of its number and diversity of stockholders. This prevents the business from operating as an S corporation. The C corporation, of course, carries the burden of double taxation. The C corporation pays taxes on its earnings and the dividends are taxed again to the stockholders when received.

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