LLC

The LLC (Limited Liability Company) is the newest form of business entity, and it is rapidly becoming one of the most popular ways for new and small businesses to operate. It is often described as a hybrid between a corporation and a partnership.

It limits personal liability, like a corporation, while providing a simpler and more flexible structure than most other forms of business. A single member LLC is taxed on the federal level the same as a sole proprietor, while a multimember LLC is taxed on the federal level the same as a partnership. Since a huge number of small businesses are sole proprietorships and partnerships, an LLC is frequently an excellent choice for these types of businesses. It retains most of the benefits of a sole proprietorship or partnership with the added benefit of limited liability, with very little in the way of extra requirements.

Entity Comparison Chart
	C Corporation	S Corporation	LLC
Owners have limited liability for business debts and obligations
Created by a state-level registration that usually protects the company name
Business duration can be perpetual
May have an unlimited number of owners
Owners need not be U.S. citizens or permanent residents
May be owned by another business, rather than individuals
May issue shares of stock to attract investors
Owners can report business profit and loss on their personal tax returns
Permitted to distribute special allocations, under certain guidelines
Not required to hold annual meetings or record meeting minutes
Owners have NO personal liability for business obligations
Number of owners allowed	1 to unlimited	1 to 100	1 to unlimited
Management decisions made by...	Board of Directors	Board of Directors	Members
Raising Capital	Sale of stock & other permitted instruments	Sale of stock & other permitted instruments	From the members
Income Taxes	Paid by the corporation	Passed through & paid by the shareholders	Paid by members unless elect corporate tax status
Who Deducts Losses	Corporation	Passed through to the shareholders	Special rules apply - check with tax advisor
Taxation	Double; both the corporation and shareholders are taxed	Taxed Once	Taxed Once
Transfer of ownership	By stock transfer	By stock transfer	Most LLC Agreements require approval of members

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