Compare the different business entities in the U.S.A.

CharacteristicsSole ProprietorshipGeneral PartnershipLimited Liability CompanySub Chapter S CorporationC Corporation
FormationNo agreement requiredAgreement of parties involved. No permission required.File with state for permissionFile with state for permissionFile with state for permission
DurationDissolved by death of owner or bankruptcyDissolved by death of owner or bankruptcyTypically limited to a fixed amount of timePerpetualPerpetual
LiabilitySole proprietor has unlimited liabilityPartners have unlimited liabilityMembers not typically liable for the debts of the LLCShareholders are typically not personally liable for the debts of the corporationShareholders are typically not personally liable for the debts of the corporation
Simplicity of OperationRelatively few legal requirementsRelatively few legal requirementsSome formal requirements but less formal than corporationsFormality of board of directors, officers, annual meetings, and annual reportingFormality of board of directors, officers, annual meetings, and annual reporting
ManagementSole proprietor decides everythingTypically each partner has an equal voice unless otherwise arrangedMembers have operating agreement that outlines managementThe corporation is managed by the board of directors who are elected by the shareholdersThe corporation is managed by the board of directors who are elected by the shareholders
TaxationSole proprietor pays taxes on his/her own tax returnEach partner pays tax on his/her share of the income and can deduct losses against other sources of incomeIf properly structured there is no tax at the entity level. Income/loss is passed through to the members of the LLCNo tax at entity level. Income/loss is passed through to the shareholderCorporation is a taxable entity
Pass Through Income/LossYesYesYesYesNo, corporate losses can't be deducted by shareholder
Double TaxationNoNoNoNoYes
Cost of CreationNoneNoneFiling fee with the stateFiling fee with the stateFiling fee with the state
Raising CapitalNoContributions from partners or an addition of more partnersPossible to sell interests. Subject to operating agreement restrictionsSell shares of stock to raise capitalSell shares of stock to raise capital
Transferability of InterestNoNoPossibleYes, subject to consentShares of stock in a corporation are easily transferable

HOW MUCH DOES IT COST?

The cost of incorporating a business entity has two main components: State filing fee and ActiveFilings’ fees. State filing fees are also based on the type of entity, processing speed and other services offered by the states. ActiveFilings.com offers 3 different incorporation packages at very competitive prices. Additionally, we can prepare your bylaws or operating agreement, obtain a Tax ID (EIN), prepare your organizational resolutions or provide you Registered Agent services in all US main jurisdictions. All this information is available here. Select your State and Type of entity from the following list to have instant information: