This table was drafted for my entrepreneur clients to point out the differences and characteristics of various business entities such as sole proprietorships, partnerships, limited partnerships, corporations, and LLCs.

1. BUSINESS ENTITY COMPARISON TABLE
limited limited
sole general limited
characteristics liability c corporation s corporation liability
proprietorship partnership partnership
partnership company
State filing
Agreement required. In
between two or California the
No state filing State filing State filing State filing fee State filing
formation more parties. use of LLP is
requirement required. required. required. required.
No state filing limited to
required. accountants and
lawyers.
Dissolves upon 1111 Jones Street, Suite 8
Dissolved if death or Dependent on Dependent on
San Francisco, California
entity ceases withdrawal of a the the
duration of doing business partner, unless requirements requirements United States 94109
Perpetual. Perpetual Perpetual
existence or upon death safeguards are imposed by the imposed by the Tel / Fax 415.345.9885
of the sole specified in the state of state of
proprietor. partnership formation. formation.
agreement.
Partners are not Shareholders Shareholders Members are
At least one
Sole proprietor Partners have typically are typically not are typically not not typically
general partner
liability has unlimited unlimited responsible for responsible for responsible for responsible for
liability. liability.
has unlimited
the debts of the the debts of the the debts of the the debts of the Email info@banijamali.com
liability.
LLP. corporation. corporation. LLC. Web www.banijamali.com
Delaware,
Georgia, Board of Board of
Some formal
Pennsylvania, directors, directors,
Relatively few Relatively few requirements,
operational Texas, and Account to annual annual
legal legal but less formal
requirements Virginia require cover liabilities. meetings, and meetings, and
requirements. requirements. that
an LLP to carry annual annual
corporations.
insurance or an reporting. reporting.
escrow.
Limited partners
Typically each are excluded
All partners Members have
Sole proprietor partner has an from Managed by Managed by
have the right an operating
has full control equal voice, management directors who directors who
management to manage the agreement that
of management unless unless they are elected by are elected by s
business outlines
and operations. otherwise serve on the shareholders. shareholders.
directly. management.
arranged. board of
directors.
Not a taxable Taxed at the
If properly
entity. Each Files taxes as a Files taxes as a entity level. If
structured,
partner pays separate entity, separate entity, dividends are No tax at the
Not a taxable there is no tax
tax on his/her must meet must meet distributed to entity level.
entity. Sole at the entity
taxation share of income certain criteria certain criteria shareholders, Income/loss is
proprietor pays level.
and can deduct to avoid being to avoid being dividends are passed through
all taxes. Income/loss is
losses against taxed as a taxed as a also taxed at to shareholders.
passed trough
other sources of corporation. corporation. the individual
to members.
income. level.
Yes, if Yes, if
pass-through
Yes Yes requirements requirements No Yes Yes
income/loss
are fulfilled. are fulfilled.
Yes, if income
double distributed to
No No No No No No
taxation shareholders as
dividends.
cost of State filing fee State filing fee State filing fee State filing fee State filing fee
None None
creation required. required. required. required. required.
Contributions Contributions Contributions Possible to sell
Often difficult
can be made can be made can be made interests,
unless Shares of stock Shares of stock
from partners, from partners, from partners, though subject
raising capital individual are sold to raise are sold to raise
and more and more and more to operating
contributes capital. capital.
partners can be partners can be partners can be agreement
funds.
added. added. added. restrictions.
Yes, pending
Possible, Possible,
approval of Yes, observing
dependent on Shares of stock dependent on
transferability other limited IRS regulations
No No operating are easily operating
of interest partners and on who can own
agreement transferred. agreement
the general stock.
restrictions. restrictions.
partners.