The main Entity Types are C-Corporations, S-Corporations, and Limited Liability Companies, with each type varying in terms of governance, tax treatment and complexity. Despite short-term benefits of the flow-through tax treatment of S-Corps and LLCs, C-Corps are much better suited for tech startups that expect to raise capital from institutional investors.
Entrepreneurs should form a business entity as soon as they embark on a new startup venture because doing so protects the owners’ personal assets from the debts and other liabilities of the business.