| Issues |
Sole
Proprietorship |
Partnership |
Limited
Liability Company |
S-Corporation |
Corporation |
| Creation |
Nothing
Required |
Agreement
of parties involved or be governed by Uniform Partnership Act |
File
Articles of Organization |
File
Articles of Incorporation with the State |
File
Articles of Incorporation with the State |
| Duration |
Life
of Proprietor |
Dissolves
at death of any one partner or bankruptcy |
Typically
limited to a fixed amount of time |
Perpetual |
Perpetual |
|
Liability
Exposure
for
Owners |
Unlimited
liability |
Unlimited
liability |
Owners
are generally not personally liable for the debts of the LLC |
Owners
are ordinarily not personally liable for the debts of the corporation |
Owners
are ordinarily not personally liable for the debts of the corporation |
|
Formalities
to
Observe |
None |
Very
few legal requirements |
Should
have regular board meetings to discuss non-regular business activity |
Should
have regular board meetings to discuss non-regular business activity |
Should
have regular board meetings to discuss non-regular business activity |
| Control |
Sole
control |
Equal
unless indicated in Partnership Agreement to the contrary |
Operating
Agreement that outlines management |
Controlled
by the board of directors who are elected by the shareholders |
Controlled
by the board of directors who are elected by the shareholders |
| Taxation |
Increased
statistical risk of audit, all business activity flows to sole proprietor |
Each
partner pays tax on their share of the income and can deduct losses
against other sources of income |
Pass
through taxation to owners. |
Pass
through taxation to owners. |
Corporation
pays tax and owners pay taxes on their dividends – double taxation. |
| Passive
Income (no wage withholdings of up to 18% |
No
passive income.
All income is subject to wage withholdings on first approximately
$85k of income at about 18% and thereafter at 3%. |
No
passive income.
All income is subject to wage withholdings on first approximately
$85k of income at about 18% and thereafter at 3%. |
No
passive income.
All income is subject to wage withholdings on first approximately
$85k of income at about 18% and thereafter at 3%. |
Yes.
You are allowed to distinguish between wager earning income and passive
income |
Yes.
You are allowed to distinguish between wager earning income and passive
income. |
| Double
Taxation |
No |
No |
No |
No |
Yes |
| Cost
of Creation |
None |
None |
Filing
fee and between $300-$750 |
Filing
fee and between $300-$750. |
Filing
fee and between $300-$750. |
