Different Forms of Business Entities

Ownership Rules:
Personal Liability of the Owners
Tax Treatment 
Key Documents, needed for formationManagement of the Business
Capital Contributions

LLC(Limited Liability Company)
-Unlimited numbers of members allowed
-Generally no personal liability of the 
-The entity is not taxes(unless chosen 
 be taxed); profits and losses are 
 passed through to the members
-Articles of Organization/ Certificate of
 Formation, Operating Agreement
-The Operating Agreement sets forth 
 how the business is to be managed;
 a Member(owner) or Manager can be 
 designated to manage the business
-The members typically contribute 
 money or services to the LLC and
 receive and interest in profits and

C Corporation
-Unlimited numbers of
shareholfers; no limit on stock classes
-Generally no personal liability of
 the shareholders
-Corporation taxes on its earnings
at corporate level and shareholders
are taxed on any distributed dividends
-Articles of Incorporation ; By Laws;
 Organizational Board Resolution;
 Stock Certificate; Stock Ledger
-Board of Directors has overall
 manaement responsability; Officer
 have day-to-day responsability
-Shareholders typically purchase 
 stock in the corporation, either
 common or preferred
S Corporation
-Up to 100 shareholders;only
 one class of stock allowed
-Generally no personal 
 liability of the shareholders
-With the filing of IRS form
 2553, a C Corporation 
 becomes a S Corporation, 
 where the profits and losses
 are passed through to the 
-Articles of Incorporation;By
 Laws; Organizational Board
 Resolutions;Stock Certificate
 Stock Ledger; IRS & State
 S Corporation election
-Board of Directors has 
 overall management
 responsbility; Officers
 have day-to-day 
-Shareholders typically 
 purchase stock in the 
 corporation, but only one 
 class of stock is allowed