After the United States’ Internal Revenue Service (IRS) classifies LLC as a pass-through-entity in 1988, all states passed legislations allowing the creation of LLC within their respective territories. It includes the state of California, which enacted The Beverly-Killea Limited Liability Company Act in 1996 that paves the way for the creation of the limited liability company within the California’s jurisdiction.

Initially, the California laws taxed LLC as a partnership with pass-through-entity tax treatment unless LLC owners declared to be taxed at the entity level.

You want to have your own business, but you are not sure whether you will adapt a sole proprietorship, a partnership, or a corporation. Although you have three structure options in a row, but you are still undecided. You are looking for a structure that will provide you the utmost personal security from liability and at the same time giving you the best tax advantage. You are also considering the most flexible in terms of management structure. Which is which?