Sole Proprietorship
✅ Pros
- Easiest to start
- Full control
- All profits to owner
- Simple taxes
✗ Cons
- Unlimited personal liability
- Hard to raise capital
- No legal separation
DBA: $10
Annual: $0
Tax: Pass-through
💼 Best for: Testing ideas, freelancers, side hustles
Partnership
✅ Pros
- Easy to form
- Shared responsibility
- Pass-through taxation
✗ Cons
- Joint liability
- Potential conflicts
- No liability protection
DBA: $10
Annual: $0
Tax: Pass-through
💼 Best for: Small businesses with 2+ founders
LLC
✅ Pros
- Liability protection
- Flexible structure
- Simple compliance
- Pass-through taxation
✗ Cons
- Self-employment tax
- More paperwork than sole prop
LARA: $50
Annual: $25
Tax: Pass-through
💼 Best for: Most small to mid-sized businesses
L3C
⚠️ Michigan-specific structure (not recognized in all states)
✅ Pros
- Combines mission + profit
- Eligible for program-related investments
- Lower reporting burden
✗ Cons
- Not tax-exempt
- Still pays taxes
- Fewer investors familiar with it
LARA: $50
Annual: $25
Tax: Pass-through
💼 Best for: Social enterprises, mission-driven startups
PLLC
⚠️ Michigan requires PLLC for licensed professionals
✅ Pros
- Liability protection
- Required for licensed pros
- Flexible structure
✗ Cons
- All members must be licensed
- No protection from own malpractice
- More oversight
LARA: $50 + proof of license
Annual: $25
Tax: Pass-through
💼 Best for: Doctors, dentists, CPAs, attorneys, architects
S-Corp
✅ Pros
- Save on self-employment tax
- Liability protection
- Easier to transfer ownership
- Attract investors
✗ Cons
- Strict IRS requirements (100 max)
- Must run payroll
- More compliance
LARA: $50–60 (as LLC/Corp)
Annual: $25
Tax: Salary + distributions
💼 Best for: Profitable LLCs with $60K+ net income
Nonprofit (501c3)
✅ Pros
- Tax-exempt
- Tax-deductible donations
- Eligible for grants
- Public trust
✗ Cons
- No personal profit
- Extensive paperwork
- IRS approval required
- Public disclosure
LARA: $20 + IRS Form 1023 ($275–600)
Annual: $0
Tax: Exempt
💼 Best for: Charities, foundations, community orgs
💡 Pro Tips
- Get a free EIN from IRS to protect your SSN
- Open a business bank account + use accounting software
- File your annual report on time to avoid dissolution
- Create an operating agreement even for single-member LLCs
- Talk to a tax professional before electing S-Corp
- Check city/county for local license requirements
- LARA Portal: michigan.gov/corporations
- IRS EIN: irs.gov/ein