Discover Which Business Entity Is Best For You
Not sure of the best type of entity for your new business? Our team of experts have created this ‘help me choose business entity’ tool to help you discover the best choice for you in just a few minutes.
Limited Liability Company (LLC) is a business structure which provides many benefits of a sole proprietorship (one owner) and partnership (multiple owners) while protecting the owners personal assets (limited liability) like a corporation.
Corporation is an entity usually reserved for larger companies with complex operations including formal record keeping and reporting requirements, numerous shareholders, or businesses planning to raise capital by selling stock.
S corporation is an entity that provides owners with limited liability, protecting the owners personal assets, while also allowing the shareholders to report business profits and losses on their individual tax returns.
LLC, C-Corporation, or S-Corporation?
|Definition||Combines elements of a corporation and a partnership.||Separate legal entity with legal rights and liabilities that are different from shareholders (owners).||Separate legal entity with legal rights and liabilities that are different from shareholders but that offers tax advantages by the IRS.||Two or more people owning and operation the business preferably with a partnership agreement.|
|Number of Owners||No limit||No limit on shareholder||100||No limit|
|How to Start||State regulated and Articles of Organization and required tax numbers.||State regulated. Need Articles of Incorporations, bylaws and tax numbers.||State regulated. Need Articles of incorporations, bylaws and tax numbers.||Should have an agreement and required tax numbers.|
|Management Control||Rests with management committee (owners or those shareholders).||Rest with the board of directors appointed by the shareholders.||Shared by owners shareholders.||Shared by general partners according to partnership agreement.|
|Taxation||Taxes can be assessed several ways based on the structure of the company but is taxed once.||Profit is taxed to the corporation and then dividends to owners are taxed again.||Profits from the company are taxed once. Profits are split among owners.||Profits from the company are taxed once. Profits are split among partners based on partnership agreement.|
|Personal Liability||Liability limited to corporation assets unless a personal guarantee is signed.||Liability limited to corporation assets unless a personal guarantee is signed.||Liability limited to corporation assets unless a personal guarantee is signed.||General partnership personal assets are at risk, limited partnership.|
|Transfer of Ownership||Yes||Yes||Yes||Based in partnership.|