Become a client

Entity Structure Decision-Making Tool

Illustration of overlapping business entity type labels (S-Corp, LLC, C-Corp, Sch C, Inc) around a large question mark, representing entity structure decision-making.
Entrepeneurship and Community Business Clinic: Business Entity Guide
Question 1 of 7
What best describes your business activity?
Freelance
Solo services: design, catering, cleaning, coaching, etc.
Product or e-commerce
Selling physical goods, software, or digital products
Service business with employees
Agency, shop, restaurant, or similar with staff
High-growth startup
Seeking VC funding or rapid scaling
1 of 7
Question 2 of 7
How many people will own the business?
Just me
Single owner
Two to four owners
Small founding team
Five or more
Larger ownership group or investors involved
2 of 7
Question 3 of 7
How much personal liability risk concerns you?
Liability risk = could you be sued personally if the business faces a lawsuit or owes money?
Low. My work is low-risk
Unlikely to face lawsuits or large debts
Moderate. Anticipate some exposure
Client contracts, physical goods, or employees involved
High. Anticipate significant exposure
Professional services, entering client homes, real estate, or large contracts
3 of 7
Question 4 of 7
Do you plan to raise outside investment?
No. The entity will be self-funded or bootstrapped
No outside investors or venture capital
Possibly. The entity will receive small loans or grants
SBA loans, friends & family, or grants
Yes. The entity will work with VC funds, angel investors, or equity investors
Issuing shares or ownership stakes
4 of 7
Question 5 of 7
How do you prefer to handle taxes?
As simple as possible
File everything on my personal return. Minimal paperwork
Pass-through with flexibility
Business income flows to owners, and the owners will then file their business income on personal tax returns
Separate corporate entity
Business taxed independently. The entity will be taxed at its own rate, and the resulting income paid to owners will be listed on their personal tax returns
5 of 7
Question 6 of 7
How much administrative work are you willing to take on?
Minimal. I want to focus on the work
No annual filings, meetings, or corporate formalities
Moderate. Some paperwork is fine
Annual state filing, operating agreement, basic records
Full. Willing to take on tax documents
Board meetings, bylaws, minutes, shareholder agreements
6 of 7
Question 7 of 7
What are your long-term goals for this business?
Lifestyle income. The business will support my life
Steady revenue, no current plans to sell or scale dramatically
Grow and possibly sell one day
Build value, maybe exit or bring on investors later
Build a large company
Rapid growth, hiring, and eventual IPO or acquisition
7 of 7
How to set up in California Step by step
Also worth discussing with a lawyer
This tool provides general educational information only, not legal advice. California fees and requirements may change, so you must always verify this information with an attorney, with the CA Secretary of State (sos.ca.gov), and Franchise Tax Board (ftb.ca.gov). Every situation is different. Please consult a licensed attorney before choosing a business structure.
Background pattern

Sign up for periodic clinic updates