|Entity Characteristics||Sole Proprietorship||Partnership||LLC||S-Corp||C-Corp|
|Requirements for Creation||No state permission requirements||Parties must agree to form partnership. No state permission requirements||Must file with state for creation||Must file with state for creation||Must file with state for creation|
|Life of Entity||Life of sole proprietor||Death of partner causes dissolution||Generally a fixed period (usually 30 years)||Unlimited||Unlimited|
|Liability to Parties Involved||Unlimited liability for sole proprietor||Unlimited liabilitiy for partners||LLC members not personally liable for company debts||Shareholders not personally liable for corporate debts||Shareholders not personally liable for corporate debts|
|Formal Requirements for Operation||Few legal requirements||Few legal requirements||Some requirements, but less than corporations||Board of directors, officers, annual meetings, and annual reports||Shareholders not personally liable for corporate debts.directors, officers, annual meetings, and annual reports. Board of directors, officers, annual meetings, and annual reports|
|Entity Management Characteristics||Sole proprietor is the manager and operator||Partners generally have equal voice||Members agree to the form of management by either members or hired management||Managed by the officers and the board of directors, the directors being elected by the shareholders, and the officers being appointed by the directors||Managed by the officers and the board of directors, the directors being elected by the shareholders, and the officers being appointed by the directors|
|Taxation Issues||There is no taxable entity. The sole proprietor pays taxes in the form of income taxes||Partners pay taxes on their share of the income and deduct losses against other sources of income||Can elect taxation method. For example, can be taxed as a corporation or can elect to have no company tax liability||Corporation has no tax liability. Taxes are paid on an individual income tax level by the shareholders when profits are passed||Corporation is taxed as well as are the individual shareholders when corporate profits are passed in the form of dividends (this is known as double-taxation).|
|Taxation Method||Income tax on proprietor||Income tax on partner's share of partnership income||Can elect taxation method. Generally no tax at the company level||Generally no tax at the company level||Profits subject to double-taxation|
|Cost of Entity Formation||None||None||State filing fees||State filing fees||State filing fees|
|Interest Transfer Issues||Individual may sell||Addition of partners or additional sale of partnership interests to existing partners||Sale of member interests may take place subject to company policy||Shares of stock may be sold to raise capital, subject to federal and state securities laws||Shares of stock may be sold to raise capital, subject to federal and state securities laws.|
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