| Type Business |
Sole Proprietor |
General Partner |
Limited Partner |
C-corp |
S-corp |
Limited Liability Company |
| Definition |
A business owned and operated by one person for profit. |
Two or more people who jointly own and operate a business. |
One or more partners have limited liability and no rights of management. |
Formed under State and Federal Law. An artificial entity seperate from its owners. |
Structured like a corporation but taxed like a partnership. |
Business entity created by statute. Owners called members. Taxed like S-Corp or partnership. Has limited Liability like a corporation
|
| Ease of fomation |
Easiest form of business to set up. Permits licenses, taxpayer ID still may be required. |
Easy to form and operate. A written partnership agreement is recommended. Employer ID number required. |
File certificate of Limited Partnership with the Secretary of State. Name must show that business is a limited partnership. Need written agreement and must maintain certain records. |
File articles of incorporation with Secretary of State. Prepare bylaws and follow corportate formalities. |
Meet all qualifications of S-Corp and file a timely election with the IRS. (within 2.5 mos. of 1st Taxable year.) |
File articles of organization with the Sec/State. Adopt operating agreement, and file necessary reports wtih the Sec/State. LLC must be in the name. |
| Period of Existence |
Terminates at will or on the death of the owner. |
Terminates by agreement, or by death or withdrawal of partner, unless there is a partner ship agreement to the contrary. |
Same as General Partnership. |
Formal dissolution. Most stable form of business Not affected by death or disaffiliation of shareholder. |
Same as C-Corp. |
Terminate by agreement or withdrawal of member. Depending on the operating agreement. |
| Taxes |
Profits taxed once. Profit and loss are reported on individuals State and Federal tax returns. |
Profits taxed once. Each partner reports his or her share of the profit and federal income tax returns. Partnership files an information return. |
Same as General Parntership. |
Subject to double taxation. Once at the corporate level and again at the shareholder level. |
Taxes once. Each shareholder reports individual profit or loss on individual tax returns. S-Corp does not pay taxes. |
Each member reports individual share of profit and loss on their individual income tax returns. Taxed like a partnership or S-Corp. If not structured properly LLC can be taxed as C-Corp. |
| Liability |
The owners personal assets are at risk. |
Each partner's personal assets are at risk. |
General partners' personal assets are at risk. Limited partner is liable only to the extent of his or her investment. |
Limited to corporate assets, except: .......... 1. Personally guaranteed business debts. ......... 2. Personal negligence or fault. ................... 3. Corporate form is found to be a sham. |
Same as C-Corp. |
Similar to rules for Corporations. |
| Dissolution |
Easist to dissolve. Pay debts, taxes, and claims against the business. |
Pay debts, taxes, and claims against business, settle partnership accounts. |
Same as General Partnership plus: File cancellation of Certificate with the Secretary of State. |
Shareholders must vote to approve dissolution. File intent with Sec/State. Pay all debts, taxes and distribute corporate assets to shareholders. |
Same as C-Corp. |
Pay debt, taxes and claims against LLC. Distribute remaining assets to members. File articles of dissolution with the Sec/State. |
