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Control |
Liability |
Taxes |
Administration |
Sole
Proprietorship |
Sole Proprietor has total control of the business operations and complete share
of profits |
All of Sole Proprietor's personal and business assets are at risk |
Taxes reported on Sole Proprietor's tax forms. Must pay self-employment taxes |
No administrative requirements other than obtaining business license and registering
trade name |
General
Partnership |
Management and profits shared between partners per the terms of the Partnership
Agreement |
General Partners are generally liable for obligations of General Partnership and
damages incurred by other General Partners |
"Pass-Through" Entity. Each general partner is taxed directly upon his/her
share of profits. |
No formal administrative requirements other than obtaining proper licenses and permits |
Limited
Partnership |
General and Limited partners share in the control and profits of the partnership
per the terms of the Partnership Agreement |
Limited partners: not personally obligated for liabilities of partnership
General partners: same as partners in a General Partnership |
Pass-Through Entity. Each partner is taxed directly upon his/her share of
profits |
Registration requirements similar to Corporations, but no burdensome record-keeping
or tax filing requirements |
|
Corporation |
Shareholders: ownership rights & elect directors
Directors: govern general affairs & appoint officers
Officers: manage business operations |
Neither Officers, Directors, or Shareholders are liable for debts incurred by the
Corporation committed in conducting the Corporation's business |
"Double-Taxation" unless "S" Corporation, which is a "Pass-Through" |
Formal incorporation process and annual registration with Secretary of State.
Comprehensive record-keeping and tax filing requirements. Must file form 2553
with IRS to be considered a S-Corp |
Limited
Liability
Company |
Members share profits per Operating Agreement which specifies management procedures |
Generally, Members risk only their investment in the LLC |
May be taxed as Sole Proprietorship, Partnership or Corporation depending
upon the election filed with the IRS |
Similar to corporation's requirements with regard to formation and operation |