When choice of entity is discussed early in the planning stages for new businesses, C corporations are often quickly taken off the table because of their notorious double taxation. Double taxation refers to the fact that the corporation is taxed on its income at the corporate level, and then its shareholders are taxed on the same income when it is distributed to them in the form of dividends. But double taxation can be mitigated, and in some cases avoided, making it a more viable option.

Series LLCs have been called the next generation of pass-through entities, gaining in popularity and use as states continue to authorize them. The lack of state uniformity in the treatment and acceptance of series LLCs has lead more conservative attorneys, advisors, and clients to avoid them, believing that the uncertainties and potential risks associated with series LLCs outweigh their perceived benefits.

 Any business that chooses to operate as a corporation, no matter how small, must comply with ongoing state law based requirements. For this reason, many small businesses choose to operate as limited liability companies, which are generally subject to minimal statutory requirements. Some states, such as Wyoming, have close corporation statutes that relax many of the formalities normally applicable to corporations. The majority of states do not have close corporation statutes, although close corporations, in the generic sense, may be formed under their general corporation statutes.