Business Entity Comparison Chart
Characteristics	Sole Proprietorship	General Partnership	Limited Partnership	Limited Liability Company	S-Corporation	Corporation
Formation	No permission required	Agreement of parties involved. No permission required	Agreement of parties involved. No permission required	File with state for permission	File with state for permission	File with state for permission
Ownership Rules	One owner	Unlimited number of general partners	Unlimited number of general and limited partners	Unlimited number of members allowed	Up to 75 shareholders allowed; one stock class	Unlimited number of shareholders allowed
Duration	Dependent on sole proprietor	Dissolved by death of partner or bankruptcy May be limited to a fixed amount of time	Dissolved by death of general partner or bankruptcy Typically limited to a fixed amount of time	Could be dissolved by death of member or bankruptcy Typically limited to a fixed amount of time	Perpetual	Perpetual
Liability	Sole proprietor has unlimited liability	Partners have unlimited liability	Limited partners not typically liable for the debts of the L.P.	Members not typically liable for the debts of the LLC	Shareholders are typically not personally liable for the debts of the corporation	Shareholders are typically not personably liable for the debts of the corporation
Simplicity of Operation	Relatively few legal requirements	Relatively few legal requirements	Relatively few legal requirements	Some formal requirements but less formal than corporations	Formality of board of directors, officers, annual meetings and annual reporting	Formality of board of directors, officers, annual meetings and annual reporting
Entity Documents	DBA filing	General Partnership Agreement	Limited Partnership Certificate Limited Partnership Agreement	Articles of Organization Operating Agreement	Articles of Incorporation ByLaws Organizational Board Resolutions Articles of Incorporation IRS S-corp election	Articles of Incorporation ByLaws Organizational Board Resolutions Articles of Incorporation
Management	full control of management and operations	Typically each partner has an equal voice unless otherwise arranged	Managed by each general partner	Members have operating agreement that outlines management	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
Taxation	No taxable entity. Sole proprietor pays all taxes.	Each partner pays tax on his/her share of the income and can deduct losses against other sources of income	Each partner pays tax on his/her share of the income and can deduct losses against other sources of income	If properly structured there is no tax at the entity level. Income/loss is passed through to members of the LLC	No tax at entity level. Income/loss is passed through to the shareholders	Corporation is a taxable entity.
IRS Tax Forms	{no entity tax return} Schedule C of Form 1040	Form 1065 Schedule K of Form 1065	Form 1065 Schedule K of Form 1065	Form 1065 Schedule K of Form 1065	Form 1120S Schedule K of Form 1120S	Form 1120 {no form for owners}
Pass Through Income/Loss	Yes	Yes	Yes	Yes	Yes	No, corporate losses can't be deducted by shareholder
Double Taxation	No	No	No	No	No	Yes
Cost of Creation	None	None	None	Filing fee with the state	Filing fee with the state	Filing fee with the state
Raising Capital	Difficult, unless individual puts in money	Contributions from partners or an addition of more partners	Contributions from partners or an addition of more partners	Possible to sell interests. Subject to operating agreement restrictions	Sell shares of stock to raise capital	Sell shares of stock to raise capital
Transferability of Interest	No	No	Possibly	Possibly	Yes, subject to consent	Shares of stock in a corporation are easily transferable