|
Entities
Characteristics |
LLC Limited Liability Company
|
C Corporation |
S Corporation |
|
Ownership Rules |
Unlimited
number of members allowed |
Unlimited
number of shareholders; no limit on stock classes |
Up to 100
shareholders; only one class of stock allowed |
|
Personal Liability of the Owners
|
Generally
no personal liability of the members |
Generally
no personal liability of the shareholders |
Generally
no personal liability of the shareholders |
|
Tax Treatment |
The entity
is not taxed (unless chosen to be taxed); profits and losses are passed
through to the members |
Corporation taxed on its earnings at a corporate level and shareholders
are taxed on any distributed dividends |
With the
filing of IRS Form 2553, a C Corporation becomes a S Corporation, where
the profits and losses are passed through to the shareholders
|
|
Key Documents Needed for Formation
|
Articles
of Organization / Certificate of Formation; Operating Agreement
|
Articles
of Incorporation; Bylaws; Organizational Board Resolutions; Stock
Certificates; Stock Ledger |
Articles
of Incorporation; Bylaws; Organizational Board Resolutions; Stock
Certificates; Stock Ledger; IRS & State S Corporation election
|
|
Management of the Business |
The
Operating Agreement sets forth how the business is to be managed; a
Member (owner) or Manager can be designated to manage the business
|
Board of
Directors has overall management responsibility; Officers have
day-to-day responsibility |
Board of
Directors has overall management responsibility; Officers have
day-to-day responsibility |
|
Capital Contributions |
The
members typically contribute money or services to the LLC and receive an
interest in profits and losses |
Shareholders typically purchase stock in the corporation, either common
or preferred |
Shareholders typically purchase stock in the corporation, but only one
class of stock is allowe |
