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You have your slate of products or services ready for your startup, but do you know how you’ll structure your business? This is important to include in your business plan and funding requests. You’ve got some choices to consider.

A business model identifies how you plan to bring in revenue, but a business structure is a little different and should be addressed early in the planning stages of a startup. When registering with the IRS, you have to  to operate under. This is more than a label — it has an impact on:

• Amount of personal risk/liability
• Legal protection
• How much you pay in taxes
• The type of benefits you receive
• How you are allowed to raise funds
• The paperwork you need to file with the government

It sounds complicated, but each structure has clear-cut distinctions that will help determine where you and your business fall. As a best practice, consult with an accountant or tax lawyer prior to starting a business, as there are key considerations and implications by starting one without a proper plan in place.

A corporation, also known as , designates your business as a separate legal entity. This makes it the option with the least personal liability — but it’s also the most expensive to form. Additionally, you’ll have to keep detailed records and report more information to the IRS than you would with other structures.

Your business structure should be labeled as a corporation only if it’s: 

• Established for a long period
• Rigid in management and has a board of directors
• Stable in day-to-day operations
• Likely to have a long, bright future — regardless of shareholders 

The business shares should also be able to be easily traded, meaning that shareholders may sell their shares on the market and see a return on investment. A drawback of forming a C corporation is that sometimes you are double-taxed — on personal income taxes and when the corporation sees income. Typically, startups will not choose the C corp business structure.

 is similar to a corporation in that, as the name implies, the person or people involved have limited liability. This means business owners and stakeholders are typically not responsible for any financial obligations the business may incur. However, this type of structure has more relaxed rules for recordkeeping and management.

If you form an LLC, you should be in a position to: 

• Share percentages of the company with members
• Have those members pay taxes — rather than the company as a whole
• Secure venture capital or high-level investments
• Be flexible with management
• Pay an initial incorporation fee and state fees monthly 

There are certain caveats in  during tax filing. Essentially, an LLC is a mixture of corporations, partnerships and sole proprietorships. Most business types can be registered as LLCs, but they should only do so if they are prepared to pay the fees associated with the greater protection if legal issues should occur.

 is a more relaxed business structure. It’s the convergence of two or more people to form a business relationship. They also share responsibility for any losses or issues that may arise — unless they file as a limited liability partnership (LLP). An LLP is similar to an LLC but with fewer restrictions. There are fewer fees to pay up front, but the partners should:

• File and pay taxes quarterly
• Draft and sign a partnership agreement
• Play contributing roles in the business

You may choose to form a partnership if your startup is more informal. You may want to test out the business idea before forming a more solid and consequential business structure.

������ is adjacent to a C corp, but it avoids the double taxation that sometimes happens with C corporations. This is possible with special consideration depending on the rules set forth by your state. Again, startups typically won’t file as a corporation, but this is something you may want to look into down the road.

���� allows you to have complete control of your business — and is automatically applied to your business even without registering. However, this means your assets are intertwined, leaving you personally responsible for any financial obligations or debts of the business. The lack of upfront fees is nice, and you may want to choose this option when your business is: 

• First starting
• Low risk
• Informal
• Owned by one person

Sole proprietorships cannot sell stocks, however, and this makes banks less likely to agree to funding via loans. You can usually change your business structure easily — especially if you are moving from an informal structure, like a sole proprietorship, to a more formal structure, like an LLC. There are also other business structures to consider, but those listed above are the most common.