LLC vs. Inc. vs. S-Corp vs. EIN and DBA
Understanding Business Structures and Filing Requirements
When starting a business, choosing the right legal structure is crucial. Each type of entity—LLC, Inc., S-Corp, PC, and PLLC serves different purposes and has distinct filing requirements.
In addition, an EIN (Employer Identification Number) is a unique nine-digit number issued by the IRS (Internal Revenue Service) to identify a business for tax purposes. A DBA (Doing Business As) is a name that a business operates under that is different from its legal name. It’s also known as a fictitious business name, trade name, or assumed name. It is different from a trademark.
Here’s a breakdown of what each is and the information needed to form or file them.
Limited Liability Company (LLC)
What Is an LLC?
A Limited Liability Company (LLC) is a business structure that offers liability protection for its owners (called members) while maintaining flexible tax options. LLCs can have one or multiple members and are often used for small businesses and startups.
Information Needed to Form an LLC:
- Business Name: Must be unique in the state of formation.
- Registered Agent: A designated individual or company responsible for receiving legal documents.This can be you, the owner of the company.
- Articles of Organization: Filed with the state’s Secretary of State office, usually including:
- Business name
- Business address
- Registered agent’s name and address
- Names of members or managers (varies by state)
- Operating Agreement (optional but recommended): Outlines ownership and management structure.
- EIN (Employer Identification Number): This is what gives your company it’s unique identity with the government.
- State Filing Fee for an LLC: Varies by state, typically $100–$500.
Corporation (Inc.)
What Is a Corporation?
A corporation (Inc.) is a separate legal entity from its owners (shareholders), offering the strongest liability protection. Corporations are more formal and suitable for businesses planning to raise capital or issue stock
Information Needed to Form a Corporation:
- Business Name: Must be unique and include an identifier like “Inc.” or “Corporation.”
- Registered Agent: A person or entity designated to receive legal documents.
- Articles of Organization: Filed with the state’s Secretary of State office, usually including:
- Corporation’s name
- Business address
- Registered agent’s name and address
- Number of authorized shares
- Names of incorporators and directors
- Corporate Bylaws: Governing document for corporate operations (not always required but recommended).
- Initial Board of Directors Meeting: To adopt bylaws and appoint officers.
- EIN (Employer Identification Number): Required for tax purposes.
- State Filing Fee: Varies by state, typically $100–$500.
S-Corporation (S-Corp Election)
What Is an S-Corp?
An S-Corporation is not a separate entity but a tax election that allows an LLC or a Corporation to pass income directly to shareholders to avoid double taxation. This is a popular election for healthcare business owners.
Information Needed to Elect S-Corp Status:
- Must Be an Eligible Business:
- Only U.S. citizens or residents as shareholders
- No more than 100 shareholders
- Only one class of stock
- File Form 2553 with the IRS within 75 days of formation or the beginning of a tax year.
- EIN (Employer Identification Number): Required before filing.
- State-Level S-Corp Filings: Some states require separate S-Corp elections.
- Your accountant can file this for you.
Professional Corporation (PC) & Professional Limited Liability Company (PLLC)
What Is a PC?
A Professional Corporation (PC) is a type of corporation designed for licensed professionals such as doctors, nurse practitioners, lawyers, and accountants. PCs provide liability protection while ensuring compliance with industry-specific regulations.
Information Needed to Form a PC:
- Business Name: Must be unique and often include “Professional Corporation” or “PC.”
- Naming Guidance for Physicians: Use a format such as “[Last Name] Medical NY PC.”
- Registered Agent: Required for legal document receipt.
- Articles of Incorporation: Filed with the Secretary of State, including:
- Business name
- Business address
- Registered agent’s details
- Share structure and incorporators’ names
- State Licensing Board Approval: Many states require approval from the relevant professional board.
- Corporate Bylaws: Outlining governance structure.
- EIN (Employer Identification Number): Required for tax filings.
- State Filing Fee: Varies by state, typically $100–$500.
What Is a PLLC?
A Professional Limited Liability Company (PLLC) is similar to a regular LLC but is designated for licensed professionals. It provides liability protection while maintaining a flexible management structure.
Information Needed to Form a PLLC:
- Business Name: Must comply with state regulations and often include “PLLC.”
- Naming Guidance for Nurse Practitioners: Use a format such as “[Full Name] Nurse Practitioner in [Specialty], NY PLLC.”
- Registered Agent: Required for legal document receipt.
- Articles of Organization: Filed with the Secretary of State, including:
- Business name
- Business address
- Registered agent’s details
- Members’ or managers’ names
- State Licensing Board Approval: Required in most states before formation.
- Operating Agreement (optional but recommended): Defines roles and responsibilities.
- EIN (Employer Identification Number): Required if hiring employees.
- State Filing Fee: Varies by state, typically $50–$500.
Employer Identification Number (EIN)
What Is an EIN?
An Employer Identification Number (EIN) is a unique tax ID assigned by the IRS to businesses for tax purposes.
Information Needed to Apply for an EIN:
- Business Name and Address
- Responsible Party’s Name and SSN/ITIN
- Business Structure (LLC, Corp, Sole Proprietor, etc.)
- Reason for Applying (e.g., hiring employees, banking needs, tax purposes)
- Business Activities Description
- Filing Method:
- Online (immediate issuance)
- Fax/Mail (takes longer)
- We can take care of this for you
Choosing the Right Structure for Your Business
- LLC: Best for small businesses looking for liability protection with flexibility.
- Corporation (Inc.): Best for businesses planning to raise capital or expand significantly.
- S-Corp: Best for businesses wanting corporate liability protection but pass-through taxation.
- PC: Required for licensed professionals who want a corporation structure.
- PLLC: Best for licensed professionals who want an LLC structure with liability protection.
- EIN: Needed for tax filing, hiring employees, and banking, regardless of entity type.
Understanding these structures helps entrepreneurs make informed decisions when forming their businesses. Each has unique requirements, so ensure compliance with state and federal regulations when filing.
What is a DBA
A DBA (Doing Business As) is a name that a business operates under that is different from its legal name. It’s also known as a fictitious business name, trade name, or assumed name.
A DBA does not provide legal protection like an LLC or corporation or a federal trademark. It’s just a name registration on the state level.
How is a DBA Different From a Trademark
A DBA (Doing Business As) and a trademark serve different legal purposes, even though they both relate to business names and branding. Here’s how they differ:
DBA (Doing Business As)
- A DBA is a fictitious business name that allows a business to operate under a name different from its legal name.
- It is typically required for sole proprietors, partnerships, and even LLCs or corporations that want to use a name other than their registered entity name.
- A DBA does not provide exclusive rights to the name—it only allows the business to use it legally within a certain jurisdiction.
- DBAs are registered at the state or county level.
Trademark
- A trademark is a form of intellectual property protection that gives exclusive rights to use a business name, logo, or slogan in connection with specific goods or services.
- A registered trademark provides nationwide protection (if registered with the USPTO) and allows the owner to take legal action against others who use a confusingly similar name.
- Unlike a DBA, a trademark grants brand protection and prevents others from using a similar name in the same industry.