Entity Comparison (C Corporation vs. S Corporation vs. LLC)
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LLC |
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Duration of Existence |
Perpetual |
Perpetual |
Determined by state law; election of members |
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Liability |
Stockholders are not responsible for the obligations of the company. |
Stockholders are not responsible for the obligations of the company. |
Members are not responsible for the obligations of the company. |
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Management |
Managed by the elected Board of Directors and operated by appointed officers. |
Managed by the elected Board of Directors and operated by appointed officers. |
Managed by either managers or members (determined by members, and set forth in operating agreement). |
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Double Taxation |
Yes. Double taxation (entity level and stockholder level, if dividends). |
No. Entity is “tax filer” but not “tax payer”. Profits and losses passed through to stockholders, which is only level of tax. |
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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Restrictions on Ownership |
None. |
Yes. Less than 100 stockholders; no entity may be stockholder; only one class of stock; stockholders must be U.S. citizens or residents. |
None. |
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Pass Through Income/Loss |
No (losses may be carried forward to possibly offset against future profits). |
Yes (all allocated annually to stockholders). Stockholders may be able to offset losses against future profits. |
Yes (all allocated annually to members). Members may be able to offset losses against future profits. |
| Transferability of Interest |
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. |
Nothing yet.
