Business Entity Comparison Table

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Sole Proprietorship General Partnership Limited Partnership C Corporation S Corporation Limited Liability Company (LLC)
more info Easy to Form



No formation requirements with the state. Will generally file a DBA (doing business as) form if using a business name. Also generally required to obtain a business license By definition, must have at least two people. The relationship is defined in an agreement, generally in writing. A Statement of Partnership may be filed with the state By definition, must have at least one general partner and one limited partner. The relationship is defined in an agreement, generally in writing. Most states require registration, payment of a filing fee and often payment of annual franchise taxes Articles of Incorporation start the legal existence of all corporations, but other required formation documents include bylaws, minutes, and issuance of stock certificates to owners Articles of Incorporation start the legal existence of all corporations, but other required formation documents include bylaws, minutes, and issuance of stock certificates to owners. Articles of Organization start the legal existence of an LLC. If it has multiple members (owners), an operating agreement may be required, generally in writing. This is essentially a partnership agreement for the LLC.
more info Limited Liability of Owners


There is no distinction between the owner and the business. The owner is personally liable for all business debts All partners typically have unlimited liability for debts to third parties, though the partnership agreement may alter this among the partners Liability of the limited partners is limited to their investments. General partners have unlimited liability Only the amount invested is at risk. Shareholders rarely have liability for the debts of the corporation Only the amount invested is at risk. Shareholders rarely have liability for the debts of the corporation Only the amount invested is at risk. Members rarely have liability for the debts of the LLC
more info Pass-through Taxation

Because there is no separateness between the owner and the business, all profits and losses of the business flow through to the owner's personal tax return A general partnership is not taxed as an entity. All profits and losses flow through to the partners to report on their personal tax returns based on their ownership percentages A limited partnership is not taxed as an entity. All profits and losses flow through to the partners to report on their personal tax returns based on their ownership percentages The profits are taxed at the corporate level based on corporate tax rates. Any dividends paid to owners are taxed again making double taxation an issue. An S Corporation is not taxed at the corporate level. All profits and losses flow through to the shareholders to report on their personal tax returns based on ownership percentages An LLC may choose from among several tax classifications depending on the number of members and their relationship (i.e., husband and wife). It can be a pass-through entity or even taxed as a C or S Corporation.
more info Continuous Life



Ends when the owner dies or sells the business Generally ends when a partnership interest is sold or when an agreed date for termination has arrived unless at least two partners remain and agree to continue the partnership Generally ends when an agreed date for termination has arrived or other event for termination occurs as provided in the limited partnership agreement By definition, corporation life is perpetual until action is taken to formally dissolve it with the state. Changes in officers, directors, or shareholders don't cause the corporation to end By definition, corporation life is perpetual until action is taken to formally dissolve it with the state. Changes in officers, directors, or shareholders don't cause the corporation to end. However, S Corporation status may be lost if any of the requirements are no longer met An LLC may have perpetual existence like a corporation, but an operating agreement or Articles of Organization may also provide for a specified termination date or number of years of existence.
more info No Restrictions on Ownership


By definition, there can only be one owner Two minimum but no maximum numbers. Partners can be individuals or other entities At least one general and one limited partner, but no maximum numbers for either. Partners can be individuals or other entities Shareholders may be individuals, other types of entities, trusts, non-resident aliens Maximum of 100 shareholders who must be individuals, certain trusts or estates; individuals must not be non-resident aliens No limit on number of members and no restriction on types of owners (unless LLC elects S Corporation status and then must meet all requirements)
more info No Restriction on Type of Business

A sole proprietor may operate any type of business General partnerships have no restrictions on the type of business they may operate A limited partnership is generally not permitted for professionals because all owners must be licensed and have a right to participate in the business A regular business corporation may engage in any type of business, but many states have additional requirements for banking, insurance, or other financial corporations. A Professional Corporation is restricted to certain licensed professionals determined by each state. A nonprofit corporation must meet certain requirements and may or may not be tax-exempt. Same as a Corporation, but does not apply to a nonprofit corporation because it does not have shareholders and is not a for-profit business A regular business LLC may generally operate any type of business that a C Corporation could operate. Many states have restrictions on certain licensed professionals forming an LLC. Some require forming a Professional LLC, others require them to form a Professional Corporation
more info Easy Raising Capital




Typically restricted to the owner's personal assets Generally limited to the partners' personal assets. May be difficult to find additional partners to bring new capital because of the unlimited liability and possible restrictions in a partnership agreement on admitting new partners Generally limited to the partners' (both general and limited) personal assets. May be able to sell additional limited partnership interests depending on provisions of the LP agreement The corporation may sell shares to investors to raise capital, subject to federal and state securities' law requirements The corporation may sell shares to raise capital as long as it continues to meet the requirements for its S Corporation status Generally limited to the members' assets. While the LLC is able to sell memberships to raise capital like a corporation can sell shares, it is also subject to securities law requirements plus the added factor that the LLC is a relatively new entity type and doesn't have the formal structure of a corporation or the benefit of a corporation's more extensive statutory regulation and court decisions

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