Edward F. Younger
Tel.:    1-540-582-6885
Tel.:    1-804-632-0156
Fax:    1-540-582-6721 
Business Entities

COMPARISON CHART FOR DIFFERENT BUSINESS ENTITIES

Characteristic C Corporations S Corporations Sole Proprietorship General Partnership Limited Partnership LLC

 

Ownership Rules Unlimited number of shareholders allowed; no limit on stock classes Up to 75 shareholders allowed; only one basic class of stock allowed One owner Unlimited number of general partners allowed Unlimited number of general and limited partners allowed Unlimited number of "members" allowed

 

Personal Liability of the Owners Generally no personal liability of the shareholders for the obligations of the corporation Generally no personal liability of the shareholders for the obligations of the corporation Unlimited personal liability for the obligations of the business Unlimited personal liability of the general partners for the obligations of the business Unlimited personal liability of the general partners for the obligations of the business; limited partners generally have no personal liability Generally no personal liability of the members for obligations of the business

 

Tax Treatment Corporation taxed on its earnings at the corporate level and the shareholders may have a further tax on any dividends distributed ("double taxation")

 

Entity generally not taxed as the profits and losses are passed through to the shareholders ("pass-through" taxation) Entity not taxed, as the profits and losses are passed through to the sole proprietor Entity not taxed as the profits and losses are passed through to the general partners Entity not taxed, as the profits and losses are passed through to the general and limited partners Entity not taxed (unless chosen to be taxed), as the profits and losses are passed through to the members
Key Documents Needed For Formation
  • Articles of Incorporation
  • Bylaws
  • Organizational Board Resolutions
  • Articles of Incorporation
  • Stock Certificates
  • Stock Ledger
  • Articles of Incorporation
  • Bylaws
  • Organizational Board Resolutions
  • Articles of Incorporation
  • Stock Certificates
  • Stock Ledger
  • IRS & State S
  • IRS & State S Corporation election
  • DBA filing
  • General Partnership Agreement
  • Local filings if partnership holds real estate
  • Limited Partnership Certificate
  • Limited Partnership Agreement
  • Articles of Organization
  • Operating Agreement
Management of the Business Board of Directors has overall management responsibility and officers have day-to-day responsibility Board of Directors has overall management responsibility and officers have day-to-day responsibility Sole proprietor manages the business The general partners have equal management rights, unless they agree otherwise The general partner manages the business, subject to any limitations of the Limited Partnership Agreement

 

 

The Operating Agreement sets forth how the business is to be managed � a Manager can be designated to manage the business
Capital Contributions Shareholders typically purchase stock in the corporation, either common or preferred Shareholders typically purchase stock in the corporation, but only one class of stock is allowed Sole proprietor contributes whatever capital needed The general partners typically contribute money or services to the partnership, and receive an interest in profits and losses The general and limited partners typically contribute money or services to the limited partnership, and receive an interest in profits and losses

 

The members typically contribute money or services to the LLC, and receive an interest in profits and
The information on this site is not, nor is it intended to be, legal advice. Please contact us to obtain legal advice pertaining to your situation.