Sole General Limited Limited Liability

Characteristics Proprietorship Partnership Partnership Company S Corporation C Corporation

No filing required.
Based on
agreement of the
parties or facts
and Must file with Must file with state Must file with Must file with state
Formation No filing required. circumstances. state official. official. state official. official.
Unlimited - as Specified in
determined by Dissolved by certificate of
the sole partner's death, limited May be limited by
Duration proprietor. bankruptcy, etc. partnership. state law. Perpetual. Perpetual.
General partners Generally, Generally,
have unlimited shareholders are shareholders are
Sole proprietor liability; limited Generally, members not personally not personally
has unlimited Partners have partners have not liable for debts liable for debts of liable for debts of
Liability liability. unlimited liability. limited liability. of the LLC. the corporation. the corporation.
Generally, each
partner has an Members agree to Managed by the Managed by the
equal voice, an operating board of directors, board of directors,
Managed solely unless otherwise Generally, agreement that who are elected who are elected
by the sole agree to by managed by the outlines by the by the
Management proprietor. partners. general partners. management. shareholders. shareholders.

"Flow through" or "Flow through" or

single level of "Flow through" or single level of
taxation: Treated single level of taxation: Treated
as a separate taxation: Treated as a separate
entity that files an as a separate entity that files an
informational entity that files an informational "Double taxation":
Single level of income tax return informational income tax return The corporation is
taxation: Not (Form 1065), but income tax return One member: If (Form 1120S), but treated as a
treated as an does not pay tax (Form 1065). there is only one does not pay tax separate entity
entity separate at the entity level. Separate entity member (unless at the entity level. that files an
from the Rather, items of that does not pay elect otherwise), the Rather, items of income tax return
taxpayer. income/gain and tax. Items of entity is disregarded income/gain and (Form 1120) and
Income and deductions/loss income/gain and and the activity deductions/loss pays tax on its
expenses are passed deductions/loss taxed the same as a are passed income.
reported on the through to passed through to sole proprietorship. through to Generally,
taxpayer's individual individual More than one individual dividends paid to
individual income partners, who partners, who member: If more members, who shareholders are
tax return report the items report their share than one member, report the items taxed as income
(generally on on their income on their income taxed the same as a on their income to the
Taxation Schedule C). tax return. tax return. partnership. tax return. shareholders.
Cost of Filing fee with the Filing fee with the Filing fee with the Filing fee with the
Formation None. None. state. state. state. state.
Contributions
from partners,
with amount
Funded by limited partners Sell shares of Sell shares of
Raising Equity individual/sole Contributions obligated to Contributions from stock to raise stock to raise
Capital proprietor. from partners. contribute limited. members. capital. capital.
Because there is
no existence Easily
separate from transferable,
sole proprietor, unless subject to a
Transferability of there is no Subject to Subject to Yes, subject to buy-sell
Interest "interest" to sell. limitations. limitations. Possibly. consent. agreement.