# Entity type

The legal form you buy or form: an LLC, an S corp, or a C corp.

It decides how the profits are taxed, what the SBA will lend against, and whether a stock sale is even possible, so it is a decision made with an accountant before the [purchase agreement](https://searchspheresource.com/glossary/purchase-agreement) is drafted rather than after. Funding a purchase with retirement money forces the answer outright, because that structure requires a C corporation. The seller's form matters as much as yours: buying the assets of an S corporation and buying its stock are different transactions with different tax bills on both sides. You are not required to have one before you start looking, and forming it early buys nothing. The entity is created to sign the purchase agreement, and its form is decided by the lender's rules, the seller's own form, and where the money comes from.

In numbers: The same $500,000 of profit can leave a very different amount in your pocket depending on the form, which is why an accountant's fee of a few thousand dollars before closing is the cheapest money in the deal.

Source: https://searchspheresource.com/glossary/entity-type
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

Site index for machines: https://searchspheresource.com/llms.txt