Table: Choosing a Business Entity

	Sole Proprietorship	General Partnership	Limited Partnership	C Corporation
Limited Liability	No	No	Yes ²	Yes
Pass-through Tax Treatment ³	Yes	Generally yes	Generally yes	No
Difficult to Form/Maintain	No	Not very	Not very	Yes
Continuity of Life	No	No	No	Yes
Centralized Management	Yes	Generally no, but partners can elect a committee of managers	Yes	Yes
Interests Freely Sold/Transferred	Yes ⁵	Generally no	Generally no	Yes
Available in All States	Yes	Yes	Yes	Yes
Minimum Number of Owners	One	Two	Two	One
	S Corporation	Limited Liability Company (LLC) ¹	Limited Liability Partnership (LLP)
Limited Liability	Yes	Yes	Yes
Pass-through Tax Treatment ³	Generally yes	Yes	Yes
Difficult to Form/Maintain	Yes	Somewhat	Somewhat
Continuity of Life	Yes	State law may limit LLC life to a set number of years ⁴	No
Centralized Management	Yes	Generally yes, since members can elect a committee of managers	The partnership agreement can centralize management
Interests Freely Sold/Transferred	Not to ineligible S shareholders	Yes, but transferee often has more limited rights unless all other members approve of a sale/transfer	No
Available in All States	Yes	Yes	No
Minimum Number of Owners	One	Generally two	Two

¹ Assumes that the LLC opts for tax treatment as a partnership.
² Limited liability is available only to the limited partners.
³ In certain circumstances, partnerships and S corporations may be taxed at the entity level.
⁴ Generally, termination dates for LLCs provided for under state law may be overridden in the LLC agreement.
⁵ Sole proprietor sells business assets rather than an interest in a business entity.

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