Elements
|
Sole
Proprietorship |
C Corp |
S Corp |
Limited Liability Company (LLC) |
|
Formation
Requirements,
Costs |
No filing required |
Must file with state,
and pay a filing
fee. |
Must file with state,
and pay a filing
fee. |
Must file with state,
and pay a filing
fee. |
|
Personal
Liability |
Unlimited liability |
Shareholders and owners are
protected from personal liability. |
Shareholders and owners are
protected from personal liability. |
Have limited personal
liability. |
|
Administrative
Requirements |
No election of Board of
Directors/officers, annual meetings. |
Election of board of
directors/officers,
annual meetings, and
annual report filing
requirements. |
Election of board of
directors/officers,
annual meetings, and
annual report filing
requirements. |
No election of Board of
Directors/officers, annual meetings. |
|
Management |
Owner has full control. |
Shareholders elect
directors who
manage business
activities. |
Shareholders elect
directors who
manage business
activities. |
Members can set up structure
as they
choose. |
|
Term |
Terminated when
proprietor ceases
doing business or
upon death. |
Perpetual: can
extend past death or
withdrawal of
shareholders. |
Perpetual: can
extend past death or
withdrawal of
shareholders. |
Perpetual, unless state
requires fixed
amount of time. |
|
Taxation |
No corporate tax.
Pay
tax as an individual. |
Must pay corporate tax. |
No corporate tax.
Pay
tax as an individual. |
No corporate tax.
Pay tax as an individual.
Income passed
through to members. |
|
Double Taxation |
No |
Yes, taxed at
corporate level and
then again if
distributed to
shareholders in the
form of dividends. |
No |
No |
|
Self Employment
Tax
(SSN/Medicaid)
(if individual earn $400 or
more) |
Yes |
Yes |
Yes |
Yes |
|
Pass Through
Tax
Treatment |
Yes |
No |
Yes |
Yes |
|
Tax Forms |
1040 |
IRS Form 1120 |
IRS Form 1120S
Shareholders get K-1
for personal tax
returns. |
(1 member) Sole Proprietor: IRS
Form
1040 - Schedule C
Partnership: IRS Form
1065, Members
get
K-1 |
|
Transferability of
Interest |
No |
Shares of stock are
easily transferred. |
Yes, but must
observe IRS regulations on who
can
own stock. |
Possibly, depending on
restrictions
outlined in the operating agreement. |
|
Raising Capital |
Individual provides
capital. |
Shares of stock are
sold to raise capital
(Securities laws
apply). |
Shares of stock are
sold to raise capital.
Limitations prevent S
corp. stock ownership
by
corporations. |
May sell interests, but
subject to
operating agreement
(Securities laws may also apply). |
|
Ease of
Operation |
Easiest |
Difficult |
Moderate |
Difficult |
