Entity Comparison Table

Sole
Proprietor

General
Partnership

Limited Liability Company

S Corporation

C Corporation

Liability

Protection

None.
Owner/proprietor has unlimited liability.

None.
Partners have unlimited liability.

Yes.
Owners/Members generally not personally liable for the debts of the business.

Yes
Owners/Shareholders are not personally liable for the debts of the corporation.

Yes.
Owners/Shareholders are not personally liable for the debts of the corporation.

Management

Owner/proprietor is responsible.

Generally partners have an equal share of responsibility.

Owners/Members can manage or elect to have designated managers.

The corporation is managed by the board of directors who are elected by the shareholders.

The corporation is managed by the board of directors who are elected by the shareholders.

Formation & Operation

Few legal requirements

Few legal requirements.

Some legal requirements, however, less formal  than corporations.

Must maintain corporate formalities such as board of directors and shareholder meetings/resolutions, annual meetings and annual reporting requirements.

Must maintain corporate formalities such as board of directors and shareholder meetings/resolutions, annual meetings and annual reporting requirements.

Duration

Life of sole proprietor.

Dissolved by death of partner.

Generally limited to a fixed amount of time, however, more states now allow perpetual existence.

Perpetual

Perpetual

Taxation

Not a separate taxable entity. Sole proprietor pays all taxes.

Partners pay tax on their share of the income and can deduct losses against other sources of income.

Generally there is no tax at the LLC level. Income/loss is passed through to members of the LLC according to the Operating Agreement.  LLC’s can elect to be taxed as a  C Corporation.

No tax at corporate level. Income/loss is passed through to the shareholders according to their percentage of ownership.

Corporation must pay tax on all income and is subject to certain restrictions on retained earnings. Shareholders then pay income tax on the income distributed to them resulting in “double taxation”.

Pass Through Taxation

Yes

Yes

Yes

Yes

No

Double Taxation

No

No

No, however, LLC’s can elect to be taxed as a  C Corporation.

No

Yes

Transferability
of Ownership

No

No

Generally yes, subject to approval from other members.

Yes, subject to consent and restrictions on Shareholders.

Yes. Generally there are no restrictions on transfers.