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| Sole Proprietorship | C Corp | S Corp | Limited Liability Company (LLC) | |
|---|---|---|---|---|
| Formation Requirements & Costs | None | Must file with state, state specific filing fee required | Same as C Corp + file with IRS | Must file with state, state specific filing fee required |
| Personal Liability | Unlimited liability | Shareholders are not typically held liable for the acts of the company or its agents | Same as C Corp | Members are not typically held liable for the acts of the company or its agents |
| Administrative Requirements | Relatively Few Requirements | Election of board of directors/officers, annual meetings, and annual report filing requirements |
Same as C Corp | Relatively Few Requirements |
| Management | Full Control | Shareholders elect directors who manage business activities | Same as C Corp | Members can set up structure as they choose |
| Term | Terminated when proprietor ceases doing business or upon death | Perpetual: can extend past death or withdrawal of shareholders | Same as C Corp | May be perpetual |
| Taxation | Entity not taxable. | Taxed at the corporate rate. | No tax at the entity level. Income passed through to members. |
No tax at the entity level. Income passed through to members. |
| Double Taxation | No | Yes, taxed at corporate level and then again if distributed to shareholders in the form of dividends |
No | No |
| Self-employment Tax | Subject to self employment tax | Salary subject to self employment tax | Salary subject to self employment tax, but shareholder distributions are not subject to employment tax | Salary subject to self employment tax |
| Pass Through Tax Treatment | Yes | No | Yes | Yes |
| Tax Forms | 1040 | 1120 | 1120S + K-1 for shareholders | 1040 or 1065 with K-1 for members |
| Transferability of Interest | Must sell business | Shares of stock are easily transferred (subject to securities laws) | Must observe IRS regulations on who can own stock | Possibly, depending on restrictions outlined in the operating agreement |
| Raising Capital | Individual provides capital. | Shares of stock are sold to raise capital (securities laws apply) | Shares of stock are sold with more restrictions than C Corp | May sell interests, but subject to operating agreement (securities laws may also apply). |
| Ease of Operation | Easiest | Must have annual meetings, Board of Directors meetings, corporate minutes, and stockholder meetings. | Same as C Corp | Easy |
| Registered Agent | Not Required | Need Registered Agent | Need Registered Agent | Need Registered Agent |
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