Compare Three Business Entities
C Corporation
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S Corporation
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Limited Liability Company
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| Business Management | |||
| Perpetual Duration of Existence |
Perpetual
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Perpetual
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Determined by state law; election of members
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| Limited Liability Protection |
Stockholders are not responsible for the obligations of the company.
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Stockholders are not responsible for the obligations of the company.
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Members are not responsible for the obligations of the company.
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| Restrictions on Ownership |
None.
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Yes. Less than 100 stockholders; no entity may be stockholder; only one class of stock; stockholders must be U.S. citizens or residents.
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None.
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| Transferability of Interest |
Shares of stock are easily transferred.
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Yes, but must observe IRS regulations on who can own stock.
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Possibly, depending on restrictions outlined in the operating agreement.
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| Taxation | |||
| Double Taxation |
Yes. Double taxation (entity level and stockholder level, if dividends).
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No. Entity is “tax filer” but not “tax payer”. Profits and losses passed through to stockholders, which is only level of tax.
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No. Typically, entity is “tax filer” but not “tax payer”. Profits and losses passed through to members, which is only level of tax.
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| Pass Through Income/Loss |
No (losses may be carried forward to possibly offset against future profits).
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Yes (all allocated annually to stockholders). Stockholders may be able to offset losses against future profits.
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Yes (all allocated annually to members). Members may be able to offset losses against future profits.
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