Limited Limited Liability Corporation

Sole Proprietorship General Partnership (“Corp.”)

Partnership Company
(“SP”) (“GP”)
(“LP”) (“LLC”)
C-Corp. B-Corp. S-Corp.
Full liability. Joint and individual. General partner:
Owner is 100% Each partner is 100% liable
(personal and Limited liability.
responsible for debt responsible for 100%
business assets). Liability limited to Limited Liability.
Liability obligations. of debt obligations.
the investment in Liability limited to the investment in the corporation.
Business and Business and LP: liable to the the LLC.
personal assets are at personal assets are at extent invested in
risk. risk. the business.

Pass through. Double taxation. Treated as a

Pass through. Pass through. Profits pass Profits taxed at the pass-through
Profits pass through Profits pass through through to the May choose either corporate level Can choose to be entity.*
Tax to the owner to be to the members to be members to be double taxation or and distributions treated as a C-
reported in personal reported in personal reported in pass-through status. to shareholder are Corp. or S-Corp. *U.S. Tax Law
outlines
tax return. tax returns. personal tax taxed as personal eligibility for S-
returns. income. corp. status.

1) Execute
1) File Articles of
Partnership
1) Begin Operating 1) Execute Organization
Agreement 1) File a Certificate of Incorporation
Partnership
How to 2) File Certificate Agreement 2) Publication
2) File Certificate 2) Elect Board of Directors
Form of Assumed
of Limited
Name 2) File Certificate of 3) Write
Partnership 3) Create Bylaws
(if applicable) Assumed Name Operating
Agreement
3) Publication
 Strong liability
 Strong liability protection
protection
 Easy to form  Easy to form
 Limited  Ability to offer different types of stock interests
 Simple to
Pros liability for
 Inexpensive to  Inexpensive to manage
some partners  Investor friendly, easier to raise capital
form form
 Transparent tax
 Easier to transfer ownership
treatment

 Complicated
 Full liability at  Full liability at formation
stake stake
 Not investor
Cons  General  Strict corporate formalities
friendly
 Hard to manage  Agency partner still
with employees relationship faces full
liability