|
CORPORATION |
S CORPORATION |
LLC |
| Formation |
Must draft and file articles of Incorporation with the Secretary of State. |
Must draft and file articles of Incorporation with the Secretary of State. Then file IRS form 2553 for S corporation status. |
File Articles of Organization with the Secretary of State. |
| Ownership |
Unlimited stock |
Limited to 100 shares for domestic ownership. |
Unlimited membership certificates. |
| Management |
Officers, directors, and share holders. |
Officers, directors, and share holders. |
Managers / owners |
| Taxation |
Taxed at the corporate level as well as the personal level. |
Profits and losses “flow through” to the owner who reports them on his personal income taxes. |
Profits and losses “flow through” to the owner who reports them on his personal income taxes. Or can opt to pay tax as a regular corporation. |
| Stock |
Yes. Unlimited stock and multiple classes of stock. |
Yes. Limited to 75 domestic share holders and can only issue one class of stock. |
Can sell membership certificates. |
| Limits personal liability |
Yes. |
Yes. |
Yes. |
| Lifespan |
Unlimited. |
Unlimited. |
Some state imposed limitations. |
| Can a non resident alien form entity? |
Yes. |
No. |
Yes |
| Corporate name protection |
Yes. |
Yes. |
Yes. |
| Can be owned by other corporation or LLC |
Yes. |
No. |
Yes. |
Required to hold annual meetings and record annual minutes |
Yes. |
Yes. |
No. |
| Raising funds |
Able to sell shares of stock, go public, accept business loans and utilize corporate credit. |
Able to sell shares of stock, go public, accept business loans or utilize corporate credit. Although the S corporation is limited to 75 domestic share holders and can only issue one class of stock. |
Can sell membership certificates to public, accept business loans, and utilize corporate credit. |
| Fringe benefits |
Yes. Fringe benefits are fully deductible for employees of the corporation. |
Yes. Restrictions apply. |
Yes. Restrictions apply. |
| Taxation |
Profits are taxed. |
Profits are taxed at the shareholder level. The shareholders report profits and losses on their individual income tax returns. The S corporation itself does not pay any tax. (Certain restrictions apply) |
Members report profits on individual income tax return. An LLC is taxed like an S corporation although it has the option of being taxed as a corporation. |
