BUSINESS MANAGEMENT

Limited Liability Protection

LLC members are not personally responsible for business debts or liabilities.

S-Corp shareholders are not personally responsible for business debts or liabilities.

C-Corp shareholders are not personally responsible for business debts or liabilities.

Non-Profit directors are not personally responsible for NPO debts or liabilities.

Sole Proprietors are personally responsible for business debts and liabilities.

Perpetual Existence

Varies

With the proper planning, LLCs can exist for generations.

S-Corps continue to exist even if the owners or majority shareholders leave or pass away.

C-Corps continue to exist even if the owners or majority shareholders leave or pass away.

Non-Profit organizations and institutions survive after their directors leave.

Sole Proprietorships do not exist when the owner quits or passes away.

Favorable for Raising Capital

Varies

LLCs can raise money via banks and investors but cannot sell stocks.

S-Corps can get loans from banks, as well as distribute stock to up to 100 people.

C-Corps have the easiest time raising capital as there is no cap on how many people can own stock.

Non-Profits can both get loans and receive tax-deductible donations.

Sole Proprietorships can occasionally receive bank loans but cannot sell stocks.

Management Flexibility

LLCs allow for a large variety of management structures based on your specific needs.

Management structures for S-Corps are largely dictated by state and federal law.

Management schemas for C-Corps are largely dictated by state and federal law.

NPOs need to follow strict management laws to guard their non-profit status.

Since Sole Proprietorships have only one member, there is no management structure.

Tax Considerations

Pass Through Taxes

LLC members are taxed on their personal tax returns. The LLC itself is not taxed.

S-Corp shareholders are taxed on their personal tax returns. The company itself is not taxed.

C-Corps are taxed both at the corporate level and again on shareholders' individual returns.

Non-Profits are taxed on a corporate level but may also enjoy a host of tax-exempt benefits.

Sole Proprietorships are taxed only on their owner's tax return.

Double Taxation

Since LLCs can be a pass-through entity, owners are taxed on their personal income.

S-Corp shareholders are taxed personally. The S-Corp, however, is not.

C-Corp income is taxed at the corporate level first, then again at the personal level. This is called "double taxation."

Non-Profits are only taxed once and can write off most of their expenses.

Sole Proprietors are taxed only on their personal tax return.

Tax Exemptions

S-Corps can claim deductions but not tax-exempt status.

C-Corporations are not tax-exempt entities

Not only are donations to Non-Profits tax-exempt, but NPOs can themselves apply for tax-exempt status.

Sole Proprietorships are the least official business entity and cannot claim tax exemption.

State Government Fees

Formation Fees

LLCs must pay state fees during the incorporation process. These fees are tax deductible.

S-Corps must pay state fees to legally incorporate. These fees are tax deductible.

C-Corps must pay state fees to become legally recognized. These fees are tax deductible.

Non-Profits pay state fees when they incorporate. These fees are tax deductible.

Since Sole Proprietorships aren't incorporated entities, they don't pay formation or compliance fees.

Compliance Fees

While LLCs have less compliance requirements than other entity types, there are reports and licenses that need to be filed and maintained.

S-Corps usually will need to file reports and pay compliance fees on an annual or semi-annual basis.

C-Corps generally must file reports with their state, as well as a host of other regulatory and compliance fees.

Non-Profits have more compliance responsibilities than other entities as they must continually preserve their tax-exempt status.

Sole Proprietors do not have ongoing compliance fees.

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