Entity Comparison
Compare the different entities to determine which type is best for you.
| Limited Liability Company | Corporation | S Corporation | |
| Duration of Existence | Dependent on the state requirements | Dependent on the state requirements | Perpetual |
| Liability | Members typically not liable for the LLC debts | Shareholders typically are not personally liable for the corporation debts | Shareholders typically are not personally liable for the corporation debts |
| Operational Requirements | Some formal requirements but fewer than corporations | Required: Board of Directors, Officers, Annual Meetings, and Annual Reporting | Required: Board of Directors, Officers, Annual Meetings, and Annual Reporting |
| Management | An operating agreement outlines management | Managed by the directors, who are elected by the shareholders | Managed by the directors, who are elected by the shareholders |
| Taxation | At the default tax status, there is no tax at the entity level. Income/loss is passed through to members. | Taxed at the entity level. Dividends paid out are taxed at the individual level. | No tax at the entity level. Income/loss is passed through to the shareholders |
| Pass Through Income/Loss | Yes | No | Yes |
| Double Taxation | No | Yes, if income is distributed to shareholders in the form of dividends. | No |
| Raising Capital | Possible to sell interests, though subject to operating agreement restrictions | Shares of stock are sold to raise capital | Shares of stock are sold to raise capital |
| Transferability of Interest | Possibly, depending on restrictions outlined in the operating agreement | Shares of stock are easily transferred | Yes, but must observe IRS regulations on who can own stock |
