Entity Type		Advantages		Disadvantages
Sole Proprietorship		Easiest to form Owner Free to make decisions Minimum Legal Restrictions Owner receives all profits		Unlimited Liability Limited ability to raise Capital Skills limited to owner’s abilities Income tax cannot be deferred Entity dissolves when Sole Proprietor dies Self-Employment Tax (S/E Tax)
Partnership		Easy to organize Combines skill and judgment Each partner has a personal interest		Unlimited Liability for the partners Authority for decision is divided Income tax cannot be deferred Entity dissolves when one Partner dies Self-Employment Tax (S/E Tax)
Corporation		Life of business is perpetual Stockholders have limited liability Easy transfer of ownership Shared Management Adaptable to small and large businesses		*Double taxation on Profits More difficult to create and organize Corporate charter restricts types business activities Subject to state and federal controls
S-Corporation		Double Taxation of earnings is avoided Same limited liability as a C- Corp Passthrough of profits is not subject SE tax		Fringe benefits restricted Shareholders pay taxes on undistributed profits Number of shareholders is limited to 75 Restrictions on who can be a Shareholder
Limited Liability Company		Same Limited Liability as corporations S-Corporation restrictions on numbers of owners does not apply Can be owned by a corporation		Must have at least two owners Earnings may be subject to SE tax Income tax cannot be deferred Life of LLC is Limited
Note: Fictitious names must be registered with the Secretary of State

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*This artilce is presented for information and educational purposes only and is not intended to constitute legal, tax or accounting advice. The article profices only a very general summary of complex rules. For advice on how these rules may apply to your specific situation, contact a professional advisor.

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