Business Owners Choose From Four Business Forms

By Andrew B. Ezell

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Business Formation

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Last Modified on Jun 24, 2025

For people in Louisiana who are starting a business, there are four main types of business formation to choose from. Each of the different forms has its advantages and disadvantages; some of them are free or inexpensive to establish while others provide benefits with regard to taxation or the liability of the owner. It is possible in most situations to begin with a business in one form and transition later into another form. The four main types of business are sole proprietorships, partnerships, limited liability companies and corporations.

A sole proprietorship is the simplest business form. It requires no legal documentation to establish, and the owner is generally taxed directly for any business gains. The owner has no liability protection in this form and may need only a business license from the city or state to get started. A partnership also has no requirement of documents to be filed with the state, but it does generally need a partnership agreement to set out the terms agreed upon by the partners.

In order to establish a limited liability company, the owner of the business must file certain documents with the secretary of state. The owners of an LLC, referred to as members, have liability protection from the actions of their business. A corporation is the most expensive to establish and offers the greatest level of distinction between the owners and the business. There are two types of corporation recognized by the tax code: C corporations and S corporations.

An attorney who has experience in business law may be able to help entrepreneurs in Louisiana with business formation. An attorney might draft and file the necessary legal documents to create the entity, help the business owner secure trademarks or other intellectual property and negotiate service contracts on the client’s behalf. An attorney may also help the owner ensure that all necessary licenses have been secured.