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You are here: Home > Comparison Of Types Of Business Entities

 

What is the Best Business Structure for you?

  • Sole Proprietorship
  • Partnership
  • C Corporation
  • S Corporation
  • Limited Liability Company (LLC)

When stating your own business it is important to know what entity is best for you.

Here is a breakdown of key factors you should consider

 

 
Comparison Of Types Of Business Entities

 

 

Sole Proprietorship

Partnership

C Corporation

S Corporation

LLC

Continuous life?

No

No

Yes

Yes

No

Pass-through taxation?

Yes

Yes

No

Yes

Yes

Free transferability of ownership interests?

No

 

No

Yes

Yes

No

Who owns the business?

Sole proprietor

Partners

Shareholders

Shareholders

Members

Restrictions on kind of business?

No

No

Yes

Yes

Yes

Who makes managerial decisions?

Sole proprietor

General partners

Board of Directors

Board of Directors

Members or Manager

Easy to raise capital through investors?

No

No

Yes

Yes, limited

No

Flexibility to select tax year?

Limited

Limited

Yes

No

Limited

Limited liability for owners?

No

Only for limited partners

Yes

Yes

Yes

Restriction on number of owners?

Yes, only one

Yes-minimum of two, no maximum

No

Yes-maximum of 75

No

Annual Fees

None

None

$800.00

$800.00

$800.00

 

If you are not incorporated, you are directly liable for the mistakes done by your business.
Lawyers and creditors can come after you and take away everything you worked
hard for like your home, your cars and your savings.
But in a corporation, for as long as you follow corporate formalities and protect the
corporate veil, whatever liabilities your business acquires stops at the corporation.
Because a Corporation is a totally separate legal entity!