Entity Comparison
Compare the different entities to determine which type is best for you.
| |
|
Duration of Existence
|
|
Liability
|
Operational
Requirements |
Management |
Taxation |
Pass
Through Income/Loss |
Double
Taxation |
Raising
Capital |
Transferability
of Interest |
|
|
Limited Liability Company
|
|
Dependent on the state requirements
|
|
Members typically not liable for the LLC debts
|
|
Some formal requirements but fewer than corporations
|
|
An operating agreement outlines management
|
|
At the default tax status, there is no tax at the entity level.
Income/loss is passed through to members.
|
|
Yes
|
|
No
|
|
Possible to sell interests, though subject to operating agreement
restrictions
|
|
Possibly, depending on restrictions outlined in the operating
agreement
|
|
|
Corporation
|
|
Perpetual
|
|
Shareholders typically are not personally liable for the corporation
debts
|
|
Required: Board of Directors, Officers, Annual Meetings, and
Annual Reporting
|
|
Managed by the directors, who are elected by the shareholders
|
|
Taxed at the entity level. Dividends paid out are taxed at
the individual level.
|
|
No
|
|
Yes, if income is distributed to shareholders in the form of
dividends.
|
|
Shares of stock are sold to raise capital
|
|
Shares of stock are easily transferred
|
|
|
S Corporation
|
|
Perpetual
|
|
Shareholders typically are not personally liable for the corporation
debts
|
|
Required: Board of Directors, Officers, Annual Meetings, and
Annual Reporting
|
|
Managed by the directors, who are elected by the shareholders
|
|
No tax at the entity level. Income/loss is passed through to
the shareholders
|
|
Yes
|
|
No
|
|
Shares of stock are sold to raise capital
|
|
Yes, but must observe IRS regulations on who can own stock
|
|
