Compare the different business entities in the U.S.A.
|Characteristics||Sole Proprietorship||General Partnership||Limited Liability Company||Sub Chapter S Corporation||C Corporation|
|Formation||No agreement required||Agreement of parties involved. No permission required.||File with state for permission||File with state for permission||File with state for permission|
|Duration||Dissolved by death of owner or bankruptcy||Dissolved by death of owner or bankruptcy||Typically limited to a fixed amount of time||Perpetual||Perpetual|
|Liability||Sole proprietor has unlimited liability||Partners have unlimited liability||Members not typically liable for the debts of the LLC||Shareholders are typically not personally liable for the debts of the corporation||Shareholders are typically not personally liable for the debts of the corporation|
|Simplicity of Operation||Relatively few legal requirements||Relatively few legal requirements||Some formal requirements but less formal than corporations||Formality of board of directors, officers, annual meetings, and annual reporting||Formality of board of directors, officers, annual meetings, and annual reporting|
|Management||Sole proprietor decides everything||Typically each partner has an equal voice unless otherwise arranged||Members have operating agreement that outlines management||The corporation is managed by the board of directors who are elected by the shareholders||The corporation is managed by the board of directors who are elected by the shareholders|
|Taxation||Sole proprietor pays taxes on his/her own tax return||Each partner pays tax on his/her share of the income and can deduct losses against other sources of income||If properly structured there is no tax at the entity level. Income/loss is passed through to the members of the LLC||No tax at entity level. Income/loss is passed through to the shareholder||Corporation is a taxable entity|
|Pass Through Income/Loss||Yes||Yes||Yes||Yes||No, corporate losses can't be deducted by shareholder|
|Cost of Creation||None||None||Filing fee with the state||Filing fee with the state||Filing fee with the state|
|Raising Capital||No||Contributions from partners or an addition of more partners||Possible to sell interests. Subject to operating agreement restrictions||Sell shares of stock to raise capital||Sell shares of stock to raise capital|
|Transferability of Interest||No||No||Possible||Yes, subject to consent||Shares 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: