The federal government of the United States aims to keep capitalism healthy and fair by ensuring businesses have the most level and competitive playing field possible. One of the tools used to enable fair access in the free market is the selection of a business entity.
In 1958, the U.S. government passed legislation creating the S-corporation, which gave small businesses the liability protections of a corporation without the double taxation of C-corporations.
Limited Liability Company
In 1977, the state of Wyoming created the first Limited Liability Company, a new type of business entity that offered better liability protection and more flexibility around management and taxation. The IRS recognized this business status 11 years later. Still, business owners were slow to adopt this new business structure until the early 2000s.
Today, LLCs are a popular choice for new business startups. Data from the Internal Revenue Service shows that in 1993, there were 17,000 LLC tax filings. By 2015, that number surged to 2.5 Million LLC tax filings.