Rule
Do not operate a Fastlane business as a sole proprietor or general partnership. Unlimited personal liability + worst tax treatment. Use one of:
- C corporation
- S corporation
- Limited Liability Company (LLC)
All three share: limitation of liability + tax-structure flexibility. The corporation also acts as a "surrogate" for the operator — paying itself first, paying government quarterly.
Compare
| Feature | C-corp | S-corp | LLC |
|---|---|---|---|
| Liability protection | Yes | Yes | Yes |
| Taxation | Corporate level + dividend (double taxation) | Pass-through to owner | Pass-through (default; can elect S-corp tax) |
| Owner count | Unlimited | Up to 100 | Flexible |
| Best for | Growth / future IPO / equity raises / asset-growth strategy | Small operating company, profits distributed yearly | Small startup, partnerships, simplicity |
| "Income splitting" strategy | Yes (split between corp and owner) | Limited | Limited |
Source's stated preference for small startups
For small startups, source recommends S-corp or LLC. C-corp earns its keep when you're growing toward an exit / capital raise / public offering, or when retained earnings (asset-growth strategy) make double taxation a fair price for the structure.
Cost / setup
Per source (2010 figures): under ~$1,000 to incorporate, sometimes a few hundred (Arizona). Current costs and rules vary by state and year — verify.
Decision questions the source asks
- What is your exit strategy? (IPO / private sale / lifestyle / never)
- What is your growth strategy?
- Worst-case liability exposure?
- Will you raise capital now or later?
- Will you hire employees?
- Will you take on partners?
- How fast do you expect profits?
Boundary
- Source explicitly notes the author is not an accountant or attorney. Verify with a licensed professional in your jurisdiction. Entity rules and tax treatment change.
- Rules and tax treatment vary substantially by country — the source is US-specific.