This table provides an at-a-glance reference to how the most common business entity types compare in a number of key characteristics. To compare all entities use the Entity Comparison Tool or view the entity comparison table in PDF format.

Characteristics	Sole Proprietorship	C Corporation	S Corporation	Limited Liability Company
Formation	No state filing required.	State filing required.	State filing required.	State filing required.
Duration of Existence	Dissolved if entity ceases doing business or upon death of the sole proprietor.	Perpetual	Perpetual	Dependent on the requirements imposed by the state of formation.
Liability	Sole proprietor has unlimited liability.	Shareholders are typically not responsible for the debts of the corporation.	Shareholders are typically not personally liable for the debts of the corporation.	Members are not typically liable for the debts of the LLC.
Operational Requirements	Relatively few legal requirements.	Board of directors, annual meetings and annual reporting required.	Board of directors, annual meetings and annual reporting required.	Some formal requirements but less formal than corporations.
Management	Sole proprietor has full control of management and operations.	Managed by the directors, who are elected by the shareholders.	Managed by the directors, who are elected by the shareholders.	Members have an operating agreement that outlines management.
Taxation	Not a taxable entity. Sole proprietor pays all taxes.	Taxed at the entity level. If dividends are distributed to shareholders, dividends are also taxed at the individual level.	No tax at the entity level. Income/loss is passed through to the shareholders.	If properly structured there is no tax at the entity level. Income/loss is passed through to members.
Pass Through Income/Loss	Yes	No	Yes	Yes
Double Taxation	No	Yes, if income is distributed to shareholders in the form of dividends.	No	No
Cost of Creation	None	State filing fee required.	State filing fee required.	State filing fee required.
Raising Capital	Often difficult unless individual contributes funds.	Shares of stock are sold to raise capital.	Shares of stock are sold to raise capital.	Possible to sell interests, though subject to operating agreement restrictions.
Transferability of Interest	No	Shares of stock are easily transferred.	Yes, but must observe IRS regulations on who can own stock.	Possibly, depending on restrictions outlined in the operating agreement.

 

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