Entity Comparison

Compare the different entities to determine which type is best for you.

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

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