The Boulder Business Advisor has a general overview of the three main types of business structures and the factors that go into making a decision about which entity to choose for your startup business.
It’s important to get tax advice when deciding what entity is best for you. Another critical question, as mentioned in the post by Mike Laszlo, is whether you plan to take venture capital. Generally, you will want a C corporation if you plan to take venture capital. But I’ve worked with a number of organizations that started as a limited liability company (LLC) and then later converted to a C corporation down the road after taking venture capital. I’ve also had organizations that started as an S corporation but later became an LLC for various reasons. Choosing one entity type in the beginning does not necessarily mean you are stuck with that entity type for eternity.
The darling of the business entity formation world right now is the LLC. But see my recent post on the factors of whether the LLC is right for your business. The LLC is not the right entity choice in all situations. Talk with a business attorney and accountant before making your business entity decision.