Which legal entity (business type) should I select?
Ultimately, this decision is up to you, your accountant, and legal team. Though Rakuten Marketing Affiliate Network doesn't make individual recommendations, we provide general information below to give your team some basic context.
Select this option if your business is not incorporated. This option is typically for independent contractors, consultants, or freelancers. Registering as an individual business will require that you provide a valid US social security number.
Select this option if your business is not incorporated and you report your business income and expenses on a Form 1040 Schedule C. This option is typically for independent contractors, consultants, or freelancers. This is the easiest form of business to set up and the easiest to dissolve.
Select this option if your business is incorporated as a partnership and you report your business income and expenses on form 1065.
Partnerships are incorporated businesses. Like corporations, partnerships are separate entities from the shareholders. Unlike corporations, partnerships must have at least one general partner who assumes unlimited liability for the business. Partnerships must have at least two shareholders. Partnerships distribute all profits and losses to their shareholders without regard for any profits retained by the business for cash flow purposes.
Select this option if your business is incorporated and you report your business income and expenses on form 1120 (C-corporation) or 1120S (S-corporation).
Corporations are incorporated businesses. Every form of business besides the sole proprietor is considered a separate entity, and this often provides a measure of legal and financial protection for the shareholders. The shareholders of corporations have limited liability protection, and corporations have full discretion over the amount of profits they can distribute or retain. Corporations are presumed to be for-profit entities, and as such they can have an unlimited number of years with losses. Corporations must have at least one shareholder.
Foreign (businesses outside the US)
Select this option if you receive commission in a country other than the United States. Please note: if you are located outside the US and do not select this option, it will cause a delay in your signup process.
Select this option if your business is incorporated as a Limited Liability Company (LLC). The LLC is a state designation. At the federal level, an LLC is taxed as a partnership. If an LLC chooses, it can be taxed as a corporation at the federal level.
Select this option if your business is a Limited Liability Partnership (LLP).
A Limited Liability Partnership is a type of partnership recognized in a majority of states in the US that protects a partner from personal liability for negligent acts committed by other partners or by employees not under their direct control. Many states restrict this type of partnership to professionals, such as lawyers, accountants, architects, and healthcare providers.
Select this option if your business is a nonprofit organization and you report income and expenses on form 990.
Nonprofits are corporations formed for a charitable, civic, or artistic purpose. Nonprofits are generally exempt from federal and state taxation on their income, and so they are often called "exempt organizations." Nonprofits have substantial responsibilities for reporting their activities, income, and assets to ensure that they are in compliance with federal and state laws governing charities.
Select this option if your organization does not fall into any of the business type choices.
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