Overview Corp

• Liability: Limited for shareholders.
• Taxation:
  • C‑Corp: Entity pays corporate tax; owners taxed on dividends.
  • S‑Corp (if eligible): Pass‑through; avoids corporate‑level tax; owner‑employee payroll applies.
• Management: Board‑managed; officers run day‑to‑day; shareholder voting.
• Ownership: Stock (common/preferred); easier to raise outside capital.
• Best for: Startups seeking investors, companies planning multiple owners or exits.

Advantages

• Strong liability shield and continuity.
• Clear stock structure for investors and equity plans.
• Potential deductions/benefits (e.g., fringe benefits more flexible under C‑Corp).
• Transferability of shares and easier ownership changes.

Disadvantages

• C‑Corp double taxation on profits/dividends (unless retained or offset by salaries/benefits).
• More formalities: bylaws, meetings, minutes, board approvals.
• S‑Corp limits: eligibility rules, one class of stock, shareholder restrictions.
• Franchise/annual report fees in many states.

Overview LLC

• Liability: Limited for members.
• Taxation (flexible): Default pass‑through; can elect S‑Corp or C‑Corp.
• Management: Member‑managed or manager‑managed.
• Formalities: Fewer than corporations; guided by Operating Agreement.
• Best for: Small–mid businesses needing liability protection and flexibility.

Advantages

• Simple upkeep vs. corporations.
• Flexible allocations and management.
• Can elect S‑Corp for potential self‑employment tax savings (owner‑employee payroll rules apply).

Disadvantages

• Active members may owe self‑employment taxes under default treatment.
• Some investors prefer corporate stock and standard cap tables.
• Annual fees/reports in many states.

Overview LP

• Liability: General Partner (GP) unlimited; Limited Partners (LPs) limited.
• Taxation: Pass‑through to partners.
• Management: GP controls; LPs are passive to preserve limited liability.
• Use cases: Real estate, investment funds, family partnerships.
• Best for: Passive‑investor structures with a managing sponsor/GP.

Advantages

• LPs enjoy limited liability with economic participation.
• Pass‑through tax treatment.
• Clear split between control (GP) and capital (LPs).

Disadvantages

• GP’s unlimited liability (often mitigated by using an LLC as the GP).
• More complex than an LLC for operating businesses.
• LPs have restricted control to maintain limited status.

Overview Sole Prop

• Liability: No separation — owner personally liable.
• Taxation: Pass‑through on Schedule C.
• Management: Owner‑managed; simplest setup.
• DBA/Name: May need a “Doing Business As” filing for trade names.
• Best for: Very small/low‑risk businesses and testing ideas.

Advantages

• Fastest and least expensive to start.
• Full control and minimal formalities.
• Straightforward tax filing on personal return.

Disadvantages

• No liability protection for business debts/claims.
• Harder to raise outside capital.
• Business ends with owner unless transferred.