| |
Sole
Proprietorship |
C Corporation |
S Corporation |
Limited Liability
Company |
| Liability |
Yes, unlimited personal liability
|
No personal liability for shareholders |
No personal
liability for
shareholders |
No personal liability for members |
Operational
Requirements |
Few legal requirements
|
Board of Directors, Annual Meeting, Annual Reporting
|
Board of Directors, Annual Meeting, Annual Reporting
|
Some formal requirements; less formal than
corporations |
| Who legally obligates the business and are responsible for decisions? |
Sole Proprietor |
Officers/Directors |
Officers/Directors |
Member/Manager |
| Taxation |
Individual Sole Proprietor tax rate
|
Tax paid at corporate level. If dividends are distributed to shareholders, dividends also taxed at individual level
(Double taxation) |
Corporate profits taxed at individual shareholder rate
|
|
| Transfer of interests |
Can sell business to another
|
Shares of stock can be transferred, may be subject to securities law
|
IRS regulations on who can own stock
|
If structured properly, no tax at entity level; income/loss passes through to members |
Death or owner leaves
|
Automatic dissolution
|
Corporation continues |
Corporation
continues
|
Subject to Articles of Organization or Operating Agreement |
