Structure Comparison

January 5, 2017 | Filed under: Business, Internet, Real Estate

 

Sole

Proprietor

General

Partnership

Limited

Partnership

“C”

Corporation

“S”

Corporation

Business Type You are the one and only owner, usually the easiest to operate and establish. Best for part time business and businesses just

starting up.

Involves two or more owners.  

Involves one or more limited partners and can have one or more general partners. General partner is involved in day- to-day functions. Limited partner only invests money without involvement in daily operations.

 

A separate entity managed by owners and/or key employees. A separate entity

with more than one

owner. Recommended for

professional services such as doctor, lawyer and accountants. Can have one to 35 share-holders.

Fee Involved Registration fees less than $100. Occupational license renewed annually Fees can range from $500 to $1,000. Occupational license renewed annually Fees can range from $500 to $1,000. Fees can range from $500 to $1,000. Fees can range from $500 to $1,000.
Liability
(debts and/or lawsuits)
Unlimited personal liability of owner. Each partner has joint and individual liability. Personal assets may be at risk. General partner has

unlimited liability. Limited partner can only lose amount invested or the amount due.

Limited to the assets of the corporation, not owners’ or shareholders’ assets, unless owner/shareholder has personally guaranteed loans for corporation. Limited to the assets of the corporation, not owners’ or shareholders’ assets, unless owner/ shareholder has personally guaranteed loans for corporation.
Taxes Owner is taxed at individual marginal rate. Self- employment tax paid on net income earned.  

Partnership income is passed through to the general or limited partners. Each partner is then taxed on their share of income at marginal tax rate. Subject to self-employment tax.

 

 

 

Partnership income is passed through to the general or limited partners. Each partner is then taxed on their share of income at marginal tax rate. A separate legal and taxable entity, the C corp pays taxes on profits. Shareholders are taxed at their individual rates when they receive dividends from corporation, but not subject to self- employment income. A separate legal entity but not a separate tax entity. Income or losses are passed to share-holders. Shareholders include their proportionate profit or loss on their individual return.

 

 

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