CHOOSING THE RIGHT ENTITY
There are often reasons to choose a specific entity that a knowledgeable attorney can help you discover. Whether you are forming a corporation or an LLC, we help you understand the various factors involved, to determine which form of business entity will best suit your needs—including protection of business owners from debts, obligations and liabilities of the business, and achieving favorable tax treatment.
As a starting point, our corporate and business attorneys suggest that clients review this chart to get an idea of what entity may work best for their particular needs.
|Charactersistics||Sole Proprietorship||General Partnership||Limited Liability Company||S-Corporation||Corporation|
|Necessary Legal Documentation||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|
|Permitted Number of Owners||One||Unlimitted, but at least two or more||Unlimited, but may be only one member||Limite to 75 Shareholders||Unlimited, but may be only one shareholder|
|Duration of Entity||Limited||Limited||Unlimited duration in many states||Perpetual||Perpetual|
|Liability||Sole proprietor is personally liable for all debts and obligations of the business.||Each partner is generally personally liable for all debts and obligations of the partnership||Members not personally liable for the debts and obligations of the LLC||Shareholders not personally liable for the debts and obligations of the corporation||Shareholders not personally liable for the debts and obligations of the corporation|
|Simplicity of Operation||Relatively few legal requirements||Some formal requirements but less than corporations||Formality of board of directors, officers and annual meetings, filing of form 2553 to elect S-corp status||Formality of board of directors, officers and annual meetings|
|Management||Full control of management and operations||Typically each partner has an equal voice unless otherwise arranged||Members have an operating agreement that outlines management||The corporation is managed by the board of directors who are elected by the shareholders, and officers run the corporation||The corporation is managed by the board of directros who are elected by the shareholders, and officers run the corporation|
|Taxation||Single Level of Taxtion||Single Level of Taxation||Single Level of Taxation||Single Level of Taxation||Double Level of Taxation|
|Pass Through Income/Loss||Yes||Yes||Yes||Yes||No, corporate losses can’t be deducted by the shareholder|