Business Structure Comparison Chart

Common Business Entity Types Compared



Business Entity Characteristics

Limited Liability Company (LLC)

C Corporation

S Corporation
Formation File Certificate of Formation (also called Articles of Organization) with State and draft internal Operating Agreement. File Articles of Incorporation with State and draft internal Bylaws. File Articles of Incorporation with State and draft internal Bylaws.
Ownership Unlimited Members Unlimited Shareholders Maximum of 100 Shareholders
Management Structure Managers and/or Owners (aka Members) Shareholders, Directors, and Officers Shareholders, Directors, and Officers
Tax Treatment "Pass-Through" (Generally earnings are taxed once at the member level) "Double Taxation" (Earnings are taxed once at the corporate level and dividends are taxed again at the shareholder level) "Pass-Through" (With the filing of IRS form 2553, earnings are taxed once at the shareholder level)
Stock / Interest Limitations Unlimited Membership Interests Unlimited Stock Offerings Limited to One Class of Stock Offering
Limited Personal Liability Yes Yes Yes
Duration of Business Existence State (of formation) Determines Requirements Ongoing (Perpetual) Ongoing (Perpetual)
Allows Ownership by other Companies or Non-US Citizens or Non-US Residents Yes Yes No

Did you know?

Businesses set up as S Corporations are limited to one type of stock offering and they are also limited to 100 shareholders. Also, all shareholders in an S Corporation must be U.S. citizens or legal U.S. residents.