Compare Business Types

Use this business structure reference chart to compare common business types.

Please use the menu below to select up to four business types to compare.

Choose Business Types
Download in PDF Format

Sole Proprietorship

Limited Liability Company

General Partnership

Limited Partnership

Limited Liability Partnership

Business Formation & Management
State filing (and filing fee) required for creation
Yes

Articles of organization must be filed and necessary filing fees paid

Yes

Articles of incorporation must be filed and necessary filing fees paid

Yes

Articles of incorporation must be filed and necessary filing fees paid

Yes

Formation documents must be filed and necessary filing fees paid

Yes

Formation documents must be filed and necessary filing fees paid

Ongoing state filings and fees
Yes

Varies by state, but typically an annual report and/or franchise tax is due every year.

Yes

Varies by state, but typically an annual report and/or franchise tax is due every year.

Yes

Varies by state, but typically an annual report and/or franchise tax is due every year.

Yes

Varies by state, but typically an annual report and/or franchise tax is due every year.

Yes

Varies by state, but typically an annual report and/or franchise tax is due every year.

Strict ongoing corporate formalities requirements
Yes
  • Adopt and maintain bylaws
  • Hold and document initial and annual meetings of directors and shareholders
  • Issue stock
  • Record stock transfers
Yes
  • Adopt and maintain bylaws
  • Hold and document initial and annual meetings of directors and shareholders
  • Issue stock
  • Record stock transfers
Flexibility in who manages the business

Owner has full control of management and operations

Yes
  • LLCs have an operating agreement that outlines the management
  • Can be member-managed or manager-managed
  • Directors, who are elected by shareholders, make major business decisions
  • Directors appoint officers, who oversee day-to-day operations
  • Directors, who are elected by shareholders, make major business decisions
  • Directors appoint officers, who oversee day-to-day operations

Owner has full control of management and operations

  • General partners are responsible for management
  • Limited partners excluded from management unless on board of directors
Yes
  • All partners have the right to manage directly
  • Management outlined in the partnership/operating agreement
Benefits
Limited liability protection

Owner has unlimited liability

Yes

Owners typically are not personally responsible for business debts and liabilities

Yes

Owners typically are not personally responsible for business debts and liabilities

Yes

Owners typically are not personally responsible for business debts and liabilities

Owners have unlimited liability

Maybe

At least one general partner has unlimited liability

Yes

Owners typically are not personally responsible for business debts and liabilities

Perpetual duration of the business

Dissolves if owner ceases doing business or dies

Maybe

Dependent on requirements of state of incorporation

Yes
Yes

Dissolves upon withdrawal or death of an owner, unless safeguards specified in partnership agreement

Yes

Maybe

Dependent on requirements of state of incorporation

Ease of raising capital

Often difficult unless owner contributes funds

Maybe

Possible to sell interests, but subject to operating agreement restrictions

Yes

Shares of stock can be sold to raise capital

Yes

Shares of stock can be sold to raise capital

Contributions can be made from partners and/or more partners can be added

Contributions can be made from partners and/or more partners can be added

Contributions can be made from partners and/or more partners can be added

Ease of adding owners/transferring ownership interest

No

Maybe

Dependent on operating agreement restrictions

Yes

Shares of stock are easily sold to add new owners or change an existing owner's percent of ownership

Yes

Shares of stock are easily sold to add new owners or change an existing owner's percent of ownership, as long as IRS restrictions on ownership are met

No

Maybe

Pending approval of other limited and general partners

Maybe

Dependent on partnership/operating agreement restrictions

Taxation
Business taxed at entity level

Maybe

LLCs may elect to be taxed like corporations, and in doing so must pay taxes at the business level on the LLC's income

Yes

C corporations pay taxes on corporate income

Pass-through income/loss
Yes

Profits/losses are reported on the owner's personal tax return and any tax due is paid by the owner at the individual tax level

Yes

Typically profits/losses are reported on the owners' personal tax return and any tax due is paid by the owners at the individual tax level

Yes

Profits/losses are reported on the owners' personal tax returns and any tax due is paid by the owners at the individual tax level

Yes

Profits/losses are reported on the owners' personal tax returns and any tax due is paid by the owners at the individual tax level

Yes

Profits/losses are reported on the owners' personal tax returns and any tax due is paid by the owner at the individual tax level

Yes

Profits/losses are reported on the owners' personal tax return and any tax due is paid by the owners at the individual tax level

Double taxation
Yes

Corporate income is taxed first at the business level and again at the individual level if distributed to owners in the form of dividends