Entity & Tax

The five forms, compared for the non-citizen owner

Every entity guide compares the same five forms on liability, tax, and paperwork. Almost none of them adds the column that decides the question for a non-citizen. Here is the comparison with that column in it.

prepared 27 August 2026 · publication gated on CPA / tax-attorney validation

The five standard ways to hold a business in the United States are the sole proprietorship, the general partnership, the limited liability company, the S corporation, and the C corporation. The generic comparisons are broadly right about all five, as far as they go. What they measure is liability, taxation, and formality. What they do not measure is the two questions a non-citizen has to ask first: may I hold this at all, and does this form let me separate owning from working.

The sole proprietorship is one person and no entity. There is nothing to form, nothing shielding personal assets, and, for this library's reader, a deeper problem: a sole proprietorship has no existence apart from its owner. There is no separation between holding the business and running it, because they are the same act. For a person whose status restricts work, a business that cannot be owned without being worked is the hardest form to hold safely. It is also a form that can never stand on the employer side of a petition, because there is no employer distinct from you.

The general partnership is two or more owners with no shield: each partner can be personally liable for the whole. Ownership is generally open to non-citizens. The working question depends on what each partner actually does, and an active partner faces the same work-authorization territory as a sole proprietor.

The LLC is the first form on the list that is a real entity. It shields members, defaults to pass-through taxation, and can elect corporate taxation instead. Membership is generally open to non-citizens, with tax consequences that deserve professional eyes, including withholding on income allocated to foreign members. Because an LLC is a separate legal person with an operating agreement, it can in principle separate ownership from management and labor, which is the property the control question in this library turns on.

The S corporation is not a different entity; it is a tax election with conditions. The condition that matters here is treated at length in its own piece: the election does not permit a nonresident alien shareholder, and "nonresident alien" is a tax-residency definition, not a visa name. For an eligible owner it offers pass-through taxation with a corporate shell. For an ineligible one it is simply unavailable, and for a company whose owner's tax residency may change, it is a standing risk.

The C corporation is the form with no ownership restriction at all: any number of shareholders, of any nationality, holding multiple classes of stock. It pays its own tax, and distributed profits are taxed again, which is the trade its owners accept. It is also the form best built to separate ownership from employment, because its governance (board, officers, bylaws) is designed to place control somewhere specific and document it. That is why it appears so often in the files of owners who also work in their companies.

Read the standard comparison after this one, not instead of it. Liability, taxation, and cost still matter. They are simply the second conversation. The first is eligibility and separation, and the five forms are not equal on either.