LLC, Corporation, Nonprofit: What’s the Difference?
(And Why Getting It Wrong Can Cost You)

When you’re launching a business, whether it’s a small LLC, a growing nonprofit, or a full corporation, it’s easy to focus on the exciting parts like branding, services, clients, and growth. But before any of that, you need something foundational:

The right business entity.

Your entity determines how your business is taxed, how protected your personal assets are, how decisions are made, and even how easy it is to grow in the future.

At Goldsby Law, PLLC, we help Connecticut entrepreneurs and business owners choose, form, and structure the business entity that fits their goals, and make sure it’s set up correctly from day one.

What Is Business Entity Formation?

Business entity formation is the legal process of creating the structure your business will operate under.

In Connecticut, that typically means choosing between:

• LLCs (Limited Liability Companies)
  
  

• Corporations
  
  

• Nonprofits
  
  

Each structure comes with its own rules for liability, taxes, governance, and record-keeping. Proper formation ensures your business is recognized by the State of Connecticut and provides the protections and benefits your structure is designed for.

Why Does Your Entity Choice Matter?

Choosing the right structure isn’t just paperwork, it shapes the entire future of your business.

1. It Protects Your Personal Assets

Most business owners choose an LLC or corporation for liability protection.
When formed correctly, these entities help shield your personal assets from business-related debts or lawsuits.

2. It Determines How You’re Taxed

LLCs, corporations, and nonprofits are taxed differently at the state and federal levels.
The right entity can help you avoid unnecessary tax burdens and align with your long-term plans.

3. It Impacts How You Operate Day-to-Day

Your entity choice affects:

• How decisions are made
  
  

• How profits are distributed
  
  

• What records you must keep
  
  

• Whether you need bylaws or an operating agreement
  
  

A lawyer helps you understand (and set up) these requirements so your business runs smoothly and legally.

4. It Helps You Avoid Legal and Compliance Mistakes

Improper formation is one of the most common (and costly) business mistakes.
A missing document, incorrect filing, or poorly drafted agreement can undermine the protections your entity is supposed to provide.

5. It Sets You Up for Growth

If you plan to hire employees, bring on investors, apply for grants, or expand, your business structure needs to support those goals from the beginning.

Which Connecticut Business Entity Is Right for You?

Here’s a simple breakdown of the most common choices:

LLC (Limited Liability Company)

Best for small businesses, freelancers, family businesses, and service providers.
Offers liability protection and flexible tax options.

Corporation (C-Corp or S-Corp)

Often used by businesses planning to scale, take on investors, or maintain a more formal management structure.

Nonprofit Organization

Ideal for mission-driven groups seeking state and federal tax-exempt status.
Requires specific formation steps and ongoing compliance.

An attorney helps you understand which benefits match your goals, and what requirements come with each option.

How a Connecticut Business Attorney Helps With Entity Formation

Forming your business is more than filing online. At Goldsby Law, PLLC, we help with:

• Choosing the right entity for your goals
  
  

• Filing formation documents with the State of Connecticut
  
  

• Drafting bylaws, operating agreements, or governance documents
  
  

• Ensuring the business meets state and federal compliance requirements
  
  

• Advising on ownership structure, responsibilities, and decision-making
  
  

• Helping nonprofits pursue tax-exempt status
  
  

• Avoiding common legal pitfalls that occur with DIY filings
  
  

Every business is unique, and its legal structure should reflect that.

Start Your Business the Right Way

Launching a business is exciting. But making sure it’s legally secure is essential.
With the right entity and the right guidance, you can operate confidently knowing your business has a strong (and compliant) foundation.

At Goldsby Law, PLLC, we help business owners form LLCs, corporations, and nonprofits with clarity, care, and long-term protection in mind.

Ready to Set Up Your Business?

Schedule a consultation with Goldsby Law, PLLC to start your business on solid legal ground, with the entity that’s right for you.