Learn the Different Entities for Your Retail Business

Retail Business

Zeroing in on the right entity for starting a retail business can be daunting when you’re starting out, especially if you don’t know the pros and cons of each structure. 

To make a better choice, you need to understand each entity well. This will determine:

  • The extent of your control on the business
  • Your business taxes and how they’ll be charged
  • Fundraising capabilities
  • How you’ll handle liabilities

So, let’s see the pros and cons of each to determine which one’s the best for you.

Sole Proprietorship

This is the simplest structure for any small retail business. As an owner, you’ll be the sole controller of the business. 


  • Easy to form: They’re the simplest to form and require the least paperwork.
  • Full control: The business owner has total control over the business’s operations. 
  • Low taxes: Income from the business is treated as the owner’s income and taxed once.


  • Unlimited liability: The business owner suffers all the losses and is liable for any business misconduct.
  • Less funding: It’s difficult to fund a Sole Proprietorship unlike other forms of business.

Limited Liability Company (LLC)

An LLC is a separate legal entity from your business. It combines the best of Sole Proprietorships and Corporations.


  • Limited liability: The business owner is not personally liable for the business’s losses.
  • Easy to start: The process of LLC formation requires less paperwork compared to Corporations.
  • Easier funding: Compared to Sole Proprietorship, having an LLC gives your company more authority. This makes it easier to get funding.


  • LLCs are harder to expand, unlike Corporations.


If your goal is to scale your retail business, Corporations are your best bet. This structure lets businesses go public and seek more funding with ease.


  • Limited liability: Corporations offer the best liability protection.
  • Funding: As mentioned, they’re the easiest entity to get funding, making it great for launching new stores and franchises.


  • Hard to form: They require a lot of paperwork and are difficult to run.
  • Double taxation: Personal, as well as corporate tax, is charged.

Read Also: How Do TikTok Healthcare Trends & Its Marketing Brings Profit?

Ready to Choose Your Business Entity?

Ultimately, the decision on which entity you choose will depend on your plans for your retail business. Whether it’s a Corporation or an LLC, you need to be clear about your future goals and the direction you want your business to take.

And if you’re still not sure, check out the infographic by GovDocFiling below.


Infographic via: GovDocFiling.com

Author Bio:

Brett Shapiro is a co-owner of GovDocFiling. He had an entrepreneurial spirit since he was young. He started GovDocFiling, a simple resource center that takes care of the mundane, yet critical, formation documentation for any new business entity. 


Learn the Different Entities for Your Retail Business


IITSWEB is the Chief Business Development Officer at IITSWEB, a Magento design and development company headquartered in Redwood City, California. He is a Member of the Magento Association and an Adobe Sales Accredited Magento Commerce professional. Jan is responsible for developing and leading the sales and digital marketing strategies of the company. He is passionate about ecommerce and Magento in particular — throughout the years his articles have been featured on Retail Dive, Hacker Noon, Chief Marketer, Mobile Marketer, TMCnet, and many others.

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