Choosing a business structure is a critical step every business
owner must take into consideration when going through the incorporation process.
The following chart provides a high-level comparison of the most popular forms
of business structure and their attributes:
|
Sole Proprietor |
General Partnership |
C Corporation |
S Corporation |
Professional Corporation |
Nonprofit Corp |
Limited Liability Company |
| Formation |
No filing required |
No filing required |
State filing required |
State filing required |
State filing required |
State and federal filings required |
State filing required |
| Limited personal liability |
No |
No |
Yes |
Yes |
Yes, except for own malpractice |
Yes |
Yes |
| Transferability of interest |
No |
No |
Yes |
Generally Limited |
Generally Limited |
N/A |
Yes, Often Limited |
| Duration |
Until withdrawal or death of owner |
Unlimited |
Unlimited |
Unlimited |
Unlimited |
Unlimited |
Unlimited |
| Pass-through taxation |
Yes |
Yes |
No |
Yes |
No |
Tax Exempt |
Yes, upon election |
| Ability to raise capital |
Not as separate entity |
Yes |
Yes |
Yes, but shareholder limits |
Yes |
Yes, through donations and grants |
Yes |
| Limitations on number of owners |
Yes |
No |
No |
Yes |
No, but all owners must be part of same profession |
N/A |
No |
