| 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 it elects to be taxed as a corporation); 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 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 Shareholder and Board Resolutions; Stock Certificates; Stock Ledger |
Articles of Incorporation; Bylaws; Organizational Shareholder and Board Resolutions; Stock Certificates; Stock Ledger; IRS (& sometimes a 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 allowed |