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There are six primary business models or structures that a company may choose in the United States. These include a sole proprietorship, a limited liability company (LLC), a partnership, a cooperative, a corporation, or an S corporation. Here's a rundown on all of your options:

What is Sole Proprietorship?

This is by far the most common and popular form of business in the United States - mostly because it's easy to start and manage. Simply put, a sole proprietorship is an unincorporated business where there is no legal distinction between the company and the individual who owns it and runs it. This is the business model most ecommerce merchants are using.

This business type is especially good for new ecommerce companies that have a low risk of liability. The company does not need to file taxes, startup costs are very low, and the owner has complete control over the business. Get a business license your local state or county, perhaps register a name, and the business is up and running. The sole proprietorship can evolve into another business type later, but is the fastest and easiest way to start.

Note though, that taxes do need to be filed under the individual owning the sole proprietorship. The risk here is that because there is no difference between the individual and the company, the individual is personally liable for everything the company does. Thus, the individual's personal assets are on the line. Also, once the business grows to more than one person, it can no longer be a sole proprietorship.

What is LLC? (Limited Liability Company)

A lot of people don't know what an LLC is, or how to get an LLC. Now it's important to note that LLCs can differ from one state to another, but generally speaking they are a hybrid business structure, combining the ease of a partnership with the liability protection found in corporations. Owners, frequently called members, pay taxes on the LLCs profits directly and the LLC itself does not file taxes as a separate legal entity.

LLCs require a lot less record keeping than corporations do, provide some protection for the member’s personal property, and are burdened with fewer profit sharing requirements than corporations. Conversely, LLC members will have to file additional forms for both federal and state taxes depending on the number of members, local laws, or even the LLC’s articles of organization. Often the members of an LLC pay payroll tax too.

Depending on the state, LLCs may also have a limited lifetime. In some jurisdictions when a member leaves the LLC, that LLC is dissolved. Starting an LLC requires significantly more effort than forming a partnership and a business will probably want to employ a lawyer or at least consult a certified public accountant.

What is a Partnership?

Partnerships are single businesses that have two or more owners. Each of these owners or partners contributes to the business either with funding, property, labor, skill, or similar.

A general partnership assumes that the business is evenly divided or that specific percentages of ownership are documented if there is a partnership agreement. A limited partnership can limit both control and liability for specified partners.