Parties |
LLC |
S Corporation |
C Corporation |
|
Person Who Forms
Business Entity |
Organizer |
Incorporator |
Incorporator |
|
Owners |
Members |
Shareholders |
Shareholders |
|
Ownership
Rules |
No
Restrictions |
Up
to 100 shareholders; only one class of stock allowed;
shareholders must be individuals, estates or certain
trusts |
No
restriction |
|
Personal
Liability
of the Owners |
Members
generally
have personal
liability protection |
Shareholders
generally have personal
liability protection |
Shareholders
generally have personal
liability protection |
|
Federal
Tax Treatment |
The
LLC itself is not taxed (unless chosen to be taxed);
profits and losses are passed through
to the members |
With
the filling of IRS Form 2553, a C Corporation becomes
a S Corporation, where the profits and losses are passed
through to the shareholders |
Corporation
taxed on
its earnings at a corporate level and shareholders
are taxed on any
distributed dividends |
|
Management |
The
Operating Agreement sets forth how
the business is to be
managed; all members or managers can be designated to
manage
the business |
Board of Directors has overall management
responsibilities;
officers have
day-to-day responsibility |
Board
of Directors has overall management responsibilities;
officers have
day-to-day responsibility |
|
Administration |
Many
formalities but fewer than for C Corporations |
Corporate
formalities must be observed |
Corporate
formalities must be observed |
Key
Documents
Needed for
Formation |
Articles
of Organization; Operating Agreement |
Articles of Incorporation; Bylaws; Organizational
Board Resolutions;
Stock Certificates; Stock Ledger; IRS & State S Corporation
election |
Articles
of Incorporation; Bylaws; Organizational Board Resolutions;
Stock Certificates;
Stock Ledger |
 |
|
|
|
