Business Entity Comparison
| C Corp | S Corp | LLC | LP | LLP | |
| Formation | State filing required. | State filing required. | State filing required. | State filing required. | State filing required. In CA & NY the use of LLP is limited to accountants & lawyers. |
| Duration of Existence | Perpetual | Perpetual | Dependent on the requirements imposed by the state of formation when forming an LLC. | Perpetual | Dependent on the requirements imposed by the state of formation. |
| Liability | Shareholders are typically not responsible for the debts of the corporation. | Shareholders are typically not responsible for the debts of the corporation. | Members are not typically liable for the debts of the LLC. | At least one general partner has unlimited liability. | Partners are not typically responsible for the debts of the LLP. |
| Operational Requirements | Board of directors, annual meetings and annual reporting required. | Board of directors, annual meetings and annual reporting required. | Some formal requirements but less formal than corporations. | Some formal requirements, but less formal than corporations. | DE, GA, PA, TX & VA require an LLP to carry insurance or an escrow account to cover liabilities. |
| Management | Managed by the directors, who are elected by the shareholders. | Managed by the directors, who are elected by the shareholders. | Members have an operating agreement that outlines management. | Limited partners are excluded from management unless they serve on the board of directors. | All partners have the right to manage the business directly. |
| Taxation | Taxed at the entity level which in most cases is at a lower rate then an individuals rate. | No tax at the entity level. Income/loss is passed through to the shareholders. | If properly structured there is no tax at the entity level. Income/loss is passed through to members. | Files taxes as separate entity, must meet certain criteria to avoid being taxed as a corporation. | Files taxes as a separate entity, must meet certain criteria to avoid being taxed as a corporation. |
| Pass Through Income/Loss | No | Yes | Yes | Yes, if requirements are fulfilled. | Yes, if requirements are fulfilled. |
| Cost of Creation | State filing fee required. | State filing fee required. | State filing fee required. | State filing fee required. | State filing fee required. |
| Raising Capital | Shares of stock are sold to raise capital. | Shares of stock are sold to raise capital. | Possible to sell interests, though subject to operating agreement restrictions. | Contributions can be made from partners and more partners can be added. | Contributions can be made from partners and more partners can be added. |
| Transferability of Interest | 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. | Yes, pending approval of other limited partners and the general partners. | Possible, dependent on operating agreement restrictions. |
View our Business Identity Structure page for a more detailed explanation of the above listed entity and their proper uses.
Sole Proprietorship & General Partnership are not listed in the above comparison because they are not actually entities. If your business is currently being operated under one of these two models please contact us to discuss the correct entity choice for your business.
