Types of Business Structures: How To Choose in 2026

Learn about 9 types of business structures—from sole proprietorships to corporations. Compare ownership, liability, and taxes to choose the right structure for your online business.

Your business structure shapes everything from your personal liability to how you pay taxes and raise money—but many new entrepreneurs don’t know where to start. Understanding the types of business you can form is especially important if you sell online, where you’re exposed to product liability across multiple states and customer data security concerns that brick-and-mortar stores may not face.

This guide explains 9 types of business structures—from sole proprietorships to corporations—comparing ownership rules, liability protection, and tax treatment to help you choose the right legal foundation for your business. You’ll understand how each structure affects your personal assets, tax obligations, and growth options, with practical guidance on matching your business structure to your goals as an online seller.

What is a business structure?

A business structure is the legal framework that determines how your business is organized, taxed, and protected. Your structure choice affects personal liability for business debts, tax obligations, paperwork requirements, and ability to raise capital.

With more than 36.2 million small businesses operating in the US in 2025, choosing the right type of business structure is one of the most important decisions you’ll make as an entrepreneur. The right choice for you depends on your specific situation—your industry, growth plans, risk tolerance, and whether you’re selling online, offline, or both.

For online sellers, structure decisions carry additional weight. When you’re shipping products across state lines, handling customer payment data, and potentially facing product liability claims from anywhere in the country, the protection your structure provides becomes critical.

9 types of business structures

Each type of business structure offers different levels of personal liability protection, tax treatment, and fundraising flexibility. Here’s what each structure means for your day-to-day operations, long-term growth, and legal obligations.

1. Sole proprietorship

A sole proprietorship is the most common legal business structure in the United States. Sole proprietorships make up 86.3% percent of “nonemployer firms” (businesses that have no employees) and 13% percent of small “employer firms,” or businesses that have paid employees. A sole proprietorship is an unincorporated business owned and run by one person, with no legal distinction between the owner and the business entity.

Here’s what defines this structure:

• Single owner by definition. You maintain full control of the business. You are accountable for all the decisions and are entitled to keep all profits after taxes. You can hire employees, but you cannot have business partners or co-owners.
• Unlimited personal liability. You are personally responsible for all business debts and legal claims. If a customer sues your business over a defective product, they can pursue your personal assets—your home, car, and personal bank accounts—to meet the judgment. For online sellers shipping physical products nationwide, this means exposure to product liability claims from customers in any state where you sell.
• Pass-through taxation. Business income flows directly to your personal tax return on Schedule C. You pay income tax and self-employment tax on all net earnings from self-employment (generally, net profit over $400). There’s no separate business tax return, which simplifies tax filing but means you pay self-employment tax on all net income, not just salary.
• Simplest formation. You don’t need to fill out any paperwork to form a sole proprietorship, and you’ll automatically operate as one the moment you start selling products or services. However, you may need to register a trade name (also called a “doing business as,” or DBA) if you operate under a name different from your legal name, and you might also need to obtain local business licenses, permits, or tax registrations depending on your location and business type.

This structure tends to work best for very low-risk online businesses in their earliest stages—selling digital products with no physical liability, testing a business concept before committing to formation costs, or running a side project while maintaining other income.

Sole proprietorship becomes risky when you’re selling physical products that could cause injury, storing customer payment information that could be breached, or scaling to revenue levels where personal liability exposure outweighs the simplicity benefits.

2. Limited liability company (LLC)

An LLC is a hybrid structure that combines the liability protection of a corporation with the tax flexibility of a partnership, making it particularly attractive for online sellers concerned about product liability and customer data security. It’s the most popular type of business for online sellers.

Key characteristics include:

• Limited liability protection. Your personal assets are kept separate from business assets. If your LLC faces a lawsuit over a defective product or a data breach, creditors can’t pursue your personal home, car, or savings. This protection requires you to maintain proper separation—separate bank accounts, proper documentation, and adherence to operating requirements. (Failing to maintain these safeguards can lead to courts "piercing the corporate veil," where courts hold owners personally liable.)
• Flexible tax treatment. Because LLCs don’t have their own tax classification, they offer unique flexibility. Single-member LLCs are taxed as sole proprietorships (pass-through taxation) by default, and multimember LLCs as partnerships. However, you can elect S corp or C corp taxation without changing your legal structure. This means you can start as a pass-through entity and switch to corporate taxation as your revenue grows, without the cost and complexity of restructuring your business.
• Operating agreement importance. While not always legally required, creating detailed operating agreements for LLCs is recommended. This written document outlines ownership percentages, profit distribution, management responsibilities, and what happens if an owner wants to exit—critical details that prevent disputes as your business grows.
• State-by-state variations. Every state has different requirements for LLC business formation.

For online sellers, this structure addresses key concerns: liability protection when shipping products that could cause injury or damage, separation of business and personal assets when processing customer payments, and flexibility to elect S corp taxation later if self-employment tax savings justify the additional complexity of running payroll.

To start an LLC you’ll need to choose a business name, appoint a registered agent, file formation documents, create an operating agreement, and obtain an employer identification number (EIN) from the IRS.

3. Partnerships

Partnerships formalize business relationships between two or more owners, with different structures offering different levels of liability protection. If you’re starting an online business with a co-founder or bringing on an investor who wants an ownership stake, understanding partnership options helps you protect both the business relationship and personal assets.

General partnership

A general partnership is the default structure when two or more people operate a business together without forming a corporation or LLC. Like sole proprietorships, general partnerships require no formal filing to exist—you’re automatically in one if you start selling products with a partner and split profits.

All partners share equal responsibility for business debts and legal claims, unless you have a written partnership agreement specifying different terms. This means general partners assume unlimited joint and several personal liability, so a general partner may be personally liable for the actions of other general partners. Creditors can pursue any partner’s personal assets for business debts, even if another partner’s actions created the liability. If your business partner processes a customer refund incorrectly and triggers a lawsuit, your personal assets are exposed.

General partnerships offer pass-through taxation, where business income flows to partners’ personal tax returns based on their ownership percentage. Each partner pays income tax and self-employment tax on their share of profits, even if those profits weren’t actually distributed.

Limited partnership

Limited partnerships (LPs) include at least one general partner with unlimited personal liability and full management control, plus one or more limited partners who invest capital but have limited liability and cannot participate in daily management. Limited partners only risk their investment amount—their personal assets remain protected from business debts as long as they don’t actively manage the business.

This structure works when you need investors who want ownership stakes but not operational involvement. For example, if you’re launching a specialty coffee ecommerce brand and a family member invests $50,000 as a limited partner, they receive profit distributions based on their ownership percentage but can’t make decisions about suppliers, pricing, or marketing—and their personal assets aren’t exposed if the business fails.

Limited liability partnership

Limited liability partnerships (LLPs) provide all partners with limited liability protection, shielding personal assets from business debts and from liability created by other partners’ actions. However, LLPs are typically restricted to professional service businesses—lawyers, accountants, architects, doctors—based on state regulations.

This means even with LLP protection, professionals remain personally liable for their own malpractice, though they’re protected from liability for other partners’ malpractice.

For most online sellers, partnerships offer less protection than LLCs while creating additional complexity around profit distribution and decision-making authority. If you’re starting a business with partners, consider forming a multimember LLC instead—you’ll get liability protection while maintaining tax flexibility and operational control.

4. C corporation

A C corporation is a separate legal entity from its owners. It offers strong liability protection but comes with “double taxation,” which can make it expensive for businesses that plan to distribute profits to owners. Understanding when the benefits of a C corp outweigh its tax costs can help you avoid overpaying—and open up opportunities for growth capital that other structures may not provide.

Key characteristics include:

• Complete separation from owners. The corporation exists independently of its shareholders. It can own property, enter contracts, sue and be sued, and continue operating even when ownership changes. Shareholders own stock representing their ownership percentage, but they’re not personally liable for corporate debts or legal claims. This liability protection is similar to an LLC when corporate formalities are maintained, although corporate law is often seen as stronger because it is more established. (However, if these formalities are not upheld in either structure, a court may “pierce the corporate veil” and hold owners personally liable.) 
• Double taxation challenge. The corporation pays tax on profits first, then shareholders pay tax again on dividend distributions. Pass-through entities avoid this second layer of taxation.
• Investment access. C corporations can issue multiple classes of stock (common and preferred), and accept investments from venture capital firms, foreign investors, and institutional investors. This makes C corps the standard structure for businesses seeking significant growth capital or planning eventual public trading. If you’re building a direct-to-consumer (DTC) brand with plans to raise Series A funding from venture capitalists, you’ll likely need a C corp structure—VCs generally won’t invest in pass-through entities.
• Higher formation and compliance costs. Beyond formation, C corps require annual meetings, meeting minutes, board of directors, bylaws, and more extensive recordkeeping than simpler structures. These “corporate formalities” protect your liability shield, but add operational complexity.

A C corporation structure may be a smart choice if you plan to seek venture capital or institutional investment (investors often require it), eventually go public, expand internationally (since it doesn’t limit ownership by citizenship), or reinvest profits back in the business instead of distributing them to owners (so they’re taxed only once at corporate rate).

Remote work expansion has accelerated the trend of businesses choosing states like Delaware, Nevada, and Wyoming as their state of formation based on factors like business law, privacy, and taxation, rather than owner location. Delaware offers specialized corporate courts and well-established corporate law, making it attractive for businesses planning significant growth even if they operate elsewhere.

If you plan to distribute most profits to yourself as the owner, double taxation makes C corps expensive compared to pass-through alternatives. Most small online sellers benefit more from LLC or S corp structures that avoid the second layer of taxation.

5. S corporation

S corporations offer pass-through taxation while maintaining corporate liability protection, making them a great choice for profitable businesses that can benefit from payroll tax savings. However, strict eligibility rules and increased IRS oversight mean this structure takes careful planning and constant compliance.

Key characteristics include:

• Pass-through taxation advantage. Unlike C corporations, S corps don’t pay corporate income tax. Instead, profits and losses pass through to shareholders’ personal tax returns, avoiding double taxation. Shareholders pay income tax on their share of profits at personal income tax rates, but—critically—only wages are subject to payroll (FICA) taxes. Profit distributions beyond salary generally aren’t subject to payroll or self-employment tax, creating potential savings compared to sole proprietorships or partnerships, where all net income faces self-employment tax.
• Reasonable compensation requirement. The IRS requires S corp owner-employees to pay themselves “reasonable compensation” for their work before taking profit distributions. You need to pay yourself a competitive market salary for your role, not artificially low wages—the IRS compares your salary to similar positions and industries.
• Strict eligibility restrictions. S corps have ownership requirements. You can’t have corporate or partnership shareholders, and you can issue only one class of stock (though voting rights can differ). These restrictions mean S corps aren’t the right choice for businesses seeking foreign investment or planning complex ownership structures.
• State tax variations. While S corps provide federal tax benefits, some states don’t recognize S corp status and tax them as C corps, or impose additional franchise taxes on S corps. Research your state’s treatment of S corporations before you choose this type of business.

S corporation is a tax election, not a legal structure. You form an LLC or C corporation first, then file IRS Form 2553 (Election by a Small Business Corporation) to elect S corp tax treatment.

S corp election can be helpful when your business generates enough profit that the savings on self-employment taxes outweigh the costs of running payroll (like payroll processing fees, workers’ comp insurance, and additional tax filings). The benefits usually kick in once your profits are high enough to cover the additional expenses of S corp compliance. For online sellers, this happens when you’ve moved beyond the startup phase into consistent profitability.

6. Benefit corporation

Benefit corporations are for-profit companies legally required to pursue public benefit alongside shareholder profit. This type of business is a good fit for entrepreneurs who want to build mission-driven businesses without sacrificing their commitment to social or environmental goals.

Key characteristics include:

• Dual purpose requirement. Benefit corporations have a legal duty to balance profit with their mission. They are legally required to consider all stakeholder interests in all major decisions. That includes the impact of decisions on workers, community, environment, and long-term business interests—not just short-term shareholder returns. This legal protection allows you to prioritize mission over immediate profits without facing shareholder lawsuits.
• Annual reporting obligation. Benefit corporations must publish an annual benefit report using a recognized third-party standard to measure impact. This report assesses the company’s social and environmental performance, explains how you promoted general and specific public benefits, and discloses any challenges in creating those benefits.This transparency requirement differentiates benefit corporations from traditional corporations making voluntary sustainability claims. 
• B Corp certification distinction. Legal benefit corporation status isn’t the same as B Corp certification. Becoming a legal benefit corporation involves filing specific formation documents with your state. B Corp certification, managed by the nonprofit B Lab, is a voluntary third-party verification process requiring you to meet rigorous standards, pay certification fees, and undergo regular audits. Many businesses pursue both—legal benefit corporation status provides the framework, while B Corp certification offers marketing credibility and community membership.

This structure is best for online sellers building brands around environmental sustainability, ethical sourcing, or social impact—for example, an apparel brand using only recycled materials or a fair trade coffee company committed to above-market prices for farmers. Consumer demand for mission-driven brands creates competitive advantage, and benefit corporation status provides legal protection for mission-focused decisions that might otherwise face shareholder challenge. Some customers specifically seek out B Corps and benefit corporations, making certification valuable for brand differentiation.

Benefit corporations are taxed like C corporations by default, facing double taxation on distributed profits. However, you can elect S corporation tax treatment if you meet S corp eligibility requirements, avoiding double taxation while maintaining your benefit corporation legal status.

7. Close corporation

Close corporations, available in some states, offer small, family-owned businesses the liability protection of traditional corporations without the rigid formalities. That means fewer meetings, simplified recordkeeping, and restricted share trading that keeps ownership within a tight group.

Key characteristics include:

• Simplified corporate formalities. Depending on state law and provisions in their formation documents, close corporations can operate with fewer requirements than traditional corporations—often eliminating the need for annual shareholder meetings, formal board of directors, or extensive meeting minutes. This reduces administrative burden while maintaining liability protection, making the structure practical for family businesses where formality can seem unnecessary.
• Restricted share trading. Shares cannot be publicly traded and typically include transfer restrictions requiring shareholder approval before selling to outsiders. This keeps ownership within the founding family or small group, preventing unwanted outside ownership while maintaining corporate structure benefits.
• Ownership limitations. This structure works only for small businesses with no plans to widely distribute ownership or seek significant outside investment.

Close corporation structure fits family businesses transitioning from partnership or sole proprietorship to a more formal structure, small businesses where all owners actively work in the company, or situations where you want corporate liability protection but want to avoid traditional corporate formalities. For most online sellers, LLC structure provides similar benefits with even greater flexibility, making close corporations less common in ecommerce than in family retail or service businesses.

8. Nonprofit corporation

Nonprofit corporations operate for charitable, educational, religious, or other public benefit purposes rather than generating profit for owners. While “nonprofit” doesn’t mean “no profit,” any revenue must be reinvested in the mission, not distributed to founders or members.

Key characteristics include:

• Tax-exempt status process. Formation requires filing articles of incorporation with your state specifying your nonprofit purpose, then applying to the IRS for tax-exempt status using Form 1023 (longer application) or Form 1023-EZ (a simplified application for smaller organizations).
• No profit distribution. Any extra revenue must be reinvested in the organization’s mission. You can’t distribute profits to founders, directors, or members, but you can pay reasonable salaries to employees (including founders who work for the organization) for services rendered. The key distinction: compensation for work is allowed; profit distribution based on ownership is not.
• Mission restrictions. Your activities must primarily support your stated charitable, educational, religious, scientific, or other qualified exempt purpose. If you generate too much unrelated business income, or spend too much on lobbying or political activity, you can jeopardize your tax-exempt status.

This structure fits organizations genuinely focused on public benefit rather than commercial profit—educational platforms offering free resources, charitable organizations supporting specific causes, or community groups providing services. For online sellers, nonprofit status rarely makes sense unless you’re creating an educational resource or donation-funded project rather than a traditional product business.

9. Cooperative

Cooperatives are businesses owned and democratically controlled by the people who use the cooperative’s services or buy its products. Unlike traditional businesses where ownership stake determines control, cooperatives typically follow “one member, one vote” governance regardless of investment amount.

Key characteristics include:

• Member ownership and control. Members elect a board of directors and vote on major decisions using democratic principles. This shared governance differentiates cooperatives from traditional corporations where voting power corresponds to share ownership. Members might be customers (such as consumer cooperatives like REI), workers (worker cooperatives like Equal Exchange), or producers (agricultural cooperatives like Organic Valley).
• Profit distribution based on use. Cooperatives distribute surplus profits to members based on how much they use the cooperative, not based on investment amount. In a consumer cooperative, you’d receive dividends based on how much you purchased. In a worker cooperative, distribution might be based on hours worked or seniority.
• Specialized tax treatment. Cooperatives can deduct patronage dividends (distributions to members) from taxable income, then pass the tax obligation to members. This effectively creates pass-through taxation while maintaining the cooperative structure.

Cooperative structure fits collective businesses where shared ownership advances the mission—worker-owned ecommerce businesses, agricultural producers selling collectively, or artisan marketplaces where makers jointly own the platform. For most individual online sellers, cooperative structure adds complexity without providing benefits that LLCs or other structures can’t deliver more simply.

How business structures compare

Understanding how business structures differ across ownership, liability, and taxation helps you evaluate your options. This comparison highlights the key distinctions that affect your decision—whether you can bring on partners, how your personal assets are protected, and what you’ll pay in taxes.

Business structure	Ownership rules	Liability protection	Tax treatment
Sole proprietorship	Single owner only	No liability protection; owner personally liable for all business debts and obligations	Pass-through taxation; income reported on the owner’s personal return; net earnings over $400 subject to self-employment tax
General partnership	Two or more owners; profit and control split equally unless a partnership agreement specifies otherwise	Unlimited joint and several personal liability for all partners	Pass-through taxation; each partner reports their share on personal return and pays income and self-employment tax
Limited partnership	At least one general partner plus one or more limited partners	General partner has unlimited liability; limited partners are liable only for their investment amount	Pass-through taxation; general partners pay income and self-employment tax; limited partners don’t, except on guaranteed payments for services
Limited liability partnership	Two or more partners, often in licensed professional fields	Partners aren’t personally liable for other partners’ misconduct but may be liable for their own actions or certain business debts, depending on the state	Pass-through taxation; partners pay income and self-employment tax on earnings
LLC (single member)	One owner (member)	Limited liability; personal assets are generally protected from business debts	Taxation by default; can elect corporate taxation (C or S corp)
LLC (multimember)	Two or more owners with flexible ownership arrangements	Limited liability for all members	Pass-through taxation by default; can elect corporate taxation (C or S corp)
S corporation	Up to 100 shareholders; US citizens or residents only; one class of stock allowed	Limited liability for shareholders	Pass-through taxation; shareholders pay income tax on their share of profits; wages are subject to FICA payroll taxes, but profit distributions generally aren’t
C corporation	No limits on number of shareholders; no citizenship/residency restrictions; multiple stock classes allowed	Limited liability for shareholders (strongest protection)	Double taxation; the corporation pays income tax on profits, and shareholders pay tax again on dividends
Benefit corporation	Similar to C corp; must pursue public benefit and consider stakeholder impact; some public benefit reporting required	Limited liability for shareholders	C corp taxation by default; can elect S corp if eligible
Close corporation	Limited shareholders; restricted transfer of shares; fewer formalities; no board required	Limited liability for shareholders	C corp taxation by default; can elect S corp if eligible
Nonprofit corporation	No owners (members don’t own equity); mission-driven; donation and grant funding common	Limited liability for directors, officers, and members (if applicable)	Tax-exempt (if 501(c) status approved by IRS); cannot distribute profits; subject to reporting and compliance
Cooperative	Democratic member ownership; “one member, one vote” structure	Limited liability for members/owners (varies by state and type)	Typically taxed under Subchapter T; may deduct member patronage dividends; some co-ops also pay corporate income tax on retained earnings

The right choice for your business depends on factors beyond tax treatment—liability exposure, growth plans, and ownership complexity should all be considered in your decision-making process.

How to choose the right business structure for you

Choosing the right structure means matching your current situation and growth plans to the protections, tax treatment, and flexibility each option provides. Rather than following a one-size-fits-all recommendation, evaluate these decision factors based on your specific circumstances as an online seller.

Evaluate your liability exposure

If you’re selling physical products that customers ingest, apply to their bodies, use on their children, or rely on for safety, your liability exposure makes an LLC or corporate structure a smart choice. Digital products with no physical harm potential carry less liability risk, although liabilities like data breaches or intellectual property issues still exist. This means a sole proprietorship might be temporarily viable while you establish the business, but doesn’t completely eliminate risk. 

Ask yourself: What’s the worst-case scenario if something goes wrong with my product or someone hacks my customer database? If the answer involves potential lawsuits that could bankrupt you personally, liability protection through LLC or corporate structure becomes more of a necessity.

Consider your tax situation

Tax optimization depends on your profit levels, whether you plan to reinvest profits or distribute them to yourself, and how much administrative complexity you can manage. 

Sole proprietorships and partnerships are simplest but expose all profit to self-employment tax. S corporations can reduce self-employment tax on profits above your salary, but only when savings exceed the costs of payroll processing and additional compliance. C corporations face double taxation on distributed profits, making them expensive unless you’re keeping profits in the business or need their unique benefits for fundraising.

Most online sellers benefit from starting with an LLC structure (taxed as sole proprietorship or partnership initially) and electing S corp taxation later when profit levels justify the complexity. This approach keeps formation simple while preserving flexibility to optimize taxes as you grow.

Think about growth and ownership plans

If you’re building alone with no plans for partners or investors, a single-member LLC keeps things simple. If you plan to bring on a co-founder or business partner, consider a multimember LLC or partnership (an LLC offers better liability protection). 

If you’re seeking venture capital or institutional investment, a C corporation structure is typically required, as most investors won’t invest in pass-through entities due to tax complications.

Businesses planning international expansion should look at C corporation status early, as it’s a structure that does not have citizenship restrictions on ownership. (An LLC doesn’t have these restrictions either, but institutional investors typically prefer a C corporation.) 

Factor in formation and ongoing costs 

Structure costs vary significantly by state and complexity. Sole proprietorships cost nothing to form but offer no liability protection. LLC and corporation formation costs vary by state and may include legal fees for drafting operating agreements, bylaws, and shareholder agreements.

Business structure	Average cost to form	Average setup time
Sole proprietorship	$0	Immediate
LLC	Varies by state ($35–$500)	Varies by state (days to weeks)
C corporation	Varies by state ($100–$800) plus legal fees	Varies by state (allow several weeks for filing and setting up legal structures)

Corporations require more extensive compliance—annual meetings, meeting minutes, board resolutions—which adds costs whether you handle it yourself or pay attorneys and accountants. Factor these ongoing costs against the benefits each structure provides.

Consider sales tax and multistate complexity

Your business structure affects how you handle sales tax in different states. Many online sellers think they need to register their business in every state where they make sales, but that’s usually not the case. 

You create a physical nexus when you have offices, warehouses, or employees in a state. You create an economic nexus when you reach certain revenue thresholds in a state, even if you have no physical presence there. An economic nexus creates sales tax obligations, but doesn’t require you to register your business there.

Structure choice affects these obligations. If you form an LLC in Delaware but operate primarily from California and store inventory in Nevada, you’ll likely need foreign LLC registration in California and Nevada (registering your Delaware LLC to do business there) plus sales tax registration in any states where you exceed economic nexus thresholds. This adds compliance complexity and cost.

For most online sellers, forming your LLC in your home state simplifies compliance, unless your state has particularly unfavorable costs or tax treatment.

Get professional guidance

Structure choice is complex enough that professional consultation can prevent expensive mistakes. For specific legal and tax advice, talk to a business attorney familiar with your state’s requirements and a CPA or tax professional who can model your specific tax situation under different structures.

Expert advice becomes particularly important when deciding if and when to elect S corporation status, evaluating whether the legal framework of a benefit corporation status supports your mission, or navigating the tax implications of changing your business structure.

Remember that structure choice isn’t permanent—you can convert as your business grows and your needs change. However, conversion can trigger tax consequences, which means you should still choose carefully at formation even if you can change later.

Types of business FAQ

Can you change your business structure after formation?

Yes, converting from one business structure to another is possible as needs change, though conversion can trigger tax consequences. One of the most common conversions is from sole proprietorship to LLC when liability protection becomes important. Converting from LLC to corporation, or between C corp and S corp status, involves more complexity but is still possible. Consult a tax professional before converting to understand potential tax liability and timing considerations.

Do you need a business structure to sell online?

No, starting sales online as a sole proprietorship doesn’t require formal registration—operating as one begins automatically when making sales, but you may still need to obtain necessary local business licenses or permits. However, selling without liability protection means your personal assets are exposed to lawsuits related to products or business activities. Most online sellers benefit from forming an LLC once they’re generating consistent revenue, typically when monthly sales exceed a few thousand dollars and liability exposure justifies the formation cost and ongoing compliance requirements.

How does business structure affect selling on multiple platforms?

Business structure doesn’t restrict which platforms are available for selling—sole proprietors, LLCs, and corporations can all sell through Shopify. However, structure affects liability protection and tax treatment regardless of where selling occurs. Selling on multiple platforms increases revenue potential, but also expands liability exposure (more transactions mean more potential for disputes or product issues). This makes LLC or corporate structures more valuable for multichannel sellers than single-platform businesses.

What structure is best for international online selling?

If you’re planning to accept foreign investment or establish foreign operations, C corporation structure is often the smart choice because it does not have citizenship restrictions on ownership, making it accessible to a wider range of investors. But if you’re simply shipping products to international customers without establishing foreign operations or accepting foreign investment, the LLC structure works fine—selling internationally is possible from any business structure type.

Does business structure affect Shopify Payments eligibility?

No, Shopify Payments accepts businesses operating as sole proprietorships, LLCs, partnerships, and corporations. However, appropriate business documentation is needed during the application process—EIN (employer identification number) for LLCs and corporations, or SSN (Social Security number) for sole proprietorships. Your structure choice should be based on liability protection, tax treatment, and growth plans rather than payment processing eligibility, since most payment processors accept all common structure types.