BUSINESS ENTITY COMPARISON CHART

“C” Corporation “S” Corporation LLC General Limited Sole

Partnership Liability Proprietor
Partnership
Registration  Must file w/State of  Must file w/State of  Must file  No requirement  Must file w/  No
w/State Illinois Illinois w/State of to file with State of Illinois registration
 Articles of  Articles of Illinois State  Certificate of
Incorporation Incorporation  Articles of  Uniform Limited
 Illinois Business  IRS Form 2553 Organization Partnership Act Partnership
Corporation Act of  Limited Liability 805 ILCS  Uniform Limited
1983 - 805 ILCS Act 805 ILCS 206/100 et. seq. Partnership Act
5/1.01 et. seq. 180/1.1 et. seq. 805 ILCS
215/0.01 et.
seq.
Ownership  Shareholders  Shareholders  Members  General  General and  Sole
partners limited partners proprietor
Management  Board of Directors  Board of Directors  Members or  General  General  Sole
Managers partners partners proprietor
(depending on
Operating
Agreement and
Articles of
Organization)
Number of  At least 1  At least 1, no more  At least 1  At least 2  At least 1  Only one
Owners than 100 member general general partner person
 Shareholders can partners and 1 limited
only be individuals, partner
certain trusts or
estates
 Shareholders may
not be partnerships,
corporations or non-
resident aliens
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 BUSINESS ENTITY COMPARISON CHART
“C” Corporation “S” Corporation LLC General Limited Sole
Partnership Liability Proprietor
Partnership
Personal  Limited liability  Limited liability  Limited liability  Unlimited  General partner  Unlimited
Liability  Max liability  Max liability  Limited to personal unlimited personal
(excluding other (excluding other investment liability personal liability
scenarios) limited scenarios) limited to (capital liability
to your investment your investment contribution)  Limited partner
(capital (capital liability limited
contribution) contribution) to investment
(capital
contribution)
Life of  Continuous  Continuous  Depends on  Depends on  Depends on  Death of sole
Business Articles of agreement, agreement, proprietor
Organization cessation of cessation of
business, death business, death
of partners of partners
Taxation of  100% to  Pass through to  Pass through to  Pass through to  Pass through to  Taxes as
Income Corporation shareholders shareholders partners unless partners unless individual
 Double taxation (to partners elect partners elect income
corporation and corporate tax corporate tax
then by treatment treatment
shareholders when
its distributed)
Deductibility  Corporate  Pass through to  Depends on tax  Pass through to  Pass through to  Same rules as
of Losses deduction shareholders status partners partners individual
 Shareholders not  Limits based on basis (limited to (limited to
allowed to deduct (shareholder’s basis) basis)
investment)

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 BUSINESS ENTITY COMPARISON CHART
“C” Corporation “S” Corporation LLC General Limited Sole
Partnership Liability Proprietor
Partnership
Advantages  Limited liability  Avoidance of double  Limited liability  Ease of  Avoidance of  Avoidance of
 Life span of taxation  Avoidance of formation double taxation double
corporation  Limited liability double taxation  Avoidance of  Limited liability taxation
 Centralized  Life span of  Centralized double taxation for limited  Lack of
management corporation management  Lack of partners formation
 Transferability  Centralized  Unlimited formalities  Unlimited costs
 Tax favored management number of number of  Ease of
employee benefit members general formation
plans  May own other partners  Complete
companies autonomous
 Favorable tax management
planning
Disadvantage  Double taxation  Corporate  Formalities of  Unlimited  Restrictions on  Unlimited
s  Corporate formalities registration liability partners liability
formalities  Costs of Formation  Costs of  Relative  Relative  Taxation
 Costs of formation  Restrictions on formation difficulty in difficulty in issues
 Annual filing fees shareholders  Annual filing transfer of transfer of
 Annual filing fees fees partnership partnership
 Lack of  Lack of
continuity in continuity in
ownership after ownership after
death death
 Unlimited
liability of
general partner

This chart is illustrative only and contains no legal advice. The choice of a business entity and its formation is a complex decision and should be based
off of legal advice after consulting with an attorney.

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