C Corporation vs S Corporation vs LLC - TRUST ME, READ THIS, IT'S MUCH NEEDED

	Sole Proprietorship	C Corp	S Corp	Limited Liability Corporation (LLC)
Formation Requirements, Costs	None	Must file with state, state specific filing fee required.	Must file with state, state specific filing fee required.	Must file with state, state specific filing fee required.
Personal Liability	Unlimited liability.	Shareholders are not typically held liable.	Shareholders are not typically held liable.	Members are not typically held liable.
Administrative Requirements	Relatively few requirements.	Election of board of directors/officers, annual meetings, and annual report filing requirements.	Election of board of directors/officers, annual meetings, and annual report filing requirements.	Relatively few requirements.
Management	Full control.	Shareholders elect directors who manage business activities.	Shareholders elect directors who manage business activities.	Members can set up structure as they choose.
Term	Terminated when proprietor ceases doing business or upon death.	Perpetual: can extend past death or withdrawal of shareholders.	Perpetual: can extend past death or withdrawal of shareholders.	Perpetual, unless state requires fixed amount of time.
Taxation	Entity not taxable. Sole proprietor pays taxes.	Taxed at corporate rate and possible double taxation: Dividends are taxed at the individual level if distributed to shareholders.	No tax at the entity level. Income passed through to the shareholders.	No tax at the entity level. Income passed through to members.
Double Taxation	No	Yes, taxed at corporate level and then again if distributed to shareholders in the form of dividends.	No	No
Self Employment Tax	Subject to self employment tax.	Salary subject to self employment tax.	Salary subject to self employment tax.	Salary subject to self employment tax, but shareholder distributions are not subject to employment tax.
Pass Through Tax Treatment	Yes	No	Yes	Yes
Tax Forms	1040	IRS Form 1120	IRS Form 1120S Shareholders get K-1 for personal tax returns.	1 member: sole proprietor IRS Form 1040 - Schedule C Partnership: IRS Form 1065, Members get K-1
Transferability of Interest	No	Shares of stock are easily transferred.	Yes, but must observe IRS regulations on who can own stock.	Possibly, depending on restrictions outlined in the operating agreement.
Capital Raising	Individual provides capital.	Shares of stock are sold to raise capital (Securities laws apply).	Shares of stock are sold to raise capital. Limitations prevent S corp stock ownership by corporations.	May sell interests, but subject to operating agreement (Securities laws may also apply).
Ease of Operation	Easiest	Must have annual meetings, Board of Directors meetings, corporate minutes, and stockholder meetings.	Must have annual meetings, Board of Directors meetings, corporate minutes, and stockholder meetings.	Easy, some states may require more than others.

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