Selecting a Structure matrix

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	Sole Proprietorship	Partnership	Corporation	S Corporation	Limited Liability Partnership	Limited Liability Company
Ownership	By a single individual	By two or more persons	By unlimited number of shareholders	By shareholders: number of shareholders limited to 75	Two or more persons or entities	One or more persons or entities
Management	The owner controls all the decision making	By general partners	Corporation's board of directors	Same as regular corporation	By general partners	Member-managed
Life	Will terminate with death or disability of owner	Generally for a specific, agreed-upon term. The partnership may be terminated by death, withdrawal, insolvency, or legal disability of a general partner	Unlimited, unless by state law or charter	Same as regular corporation	Generally for a specific, agreed-upon term. Partnership may be terminated by death, withdrawal, insolvency, or legal disability of a general partner	May be for a specific agreed-upon time, or at will depending on what is set forth in the articles
Liability	Unlimited liability - The owner is responsible for all of the company’s debts	Unlimited for general partners. General partners are jointly and severally liable for obligations of partnership. Limited partner's liability limited to amount invested	Shareholders' liability limited to their investment in corporation stock	Same as regular corporation	Limited to amount of investment	Limited to amount of investment, or as specified in Articles of Organization
Taxation	Owner taxed on business profits whether or not distributed and will have to pay a self-employment tax on all of the company’s earnings	Partners taxed on share of partnership income whether or not distributed Partners must pay self-employment taxes on all earnings but do not have to pay unemployment insurance taxes on their salaries	Corporation taxed on taxable income, whether or not distributed to shareholders Income is taxed twice 1) at the corporate level; & 2) at the employee level when a wage is paid or a the shareholder level when distributed as a dividend	Shareholders taxed on taxable income of corporation, whether or not distributed Corporation taxes like a partnership or sole proprietorship with the profits taxes at the individual rather than the corporate rate	Partners taxed on share of partnership income whether or not distributed	Members taxed on share of company income whether or not distributed Members can deduct operating losses against regular income
Advantages	Tax advantage by avoiding corporate income tax Centralized decision-making Low start-up costs Owner retainers all of the profits	Easy to form Increased sources of capital Tax advantage by avoiding corporate income tax	Legal entity separate from individuals Limited personal liability Continuity of existence Continuity of management Readily transferable interests Easy to raise capital	Legal entity separate from individuals Limited personal liability Continuity of existence Continuity of management Readily transferable interests Possible separation of ownership and management Net operating loss deductible by shareholders Avoids double taxation	Ease of formation Limited personal liability Increased sources of capital Tax advantage by avoiding corporate income tax	Legal entity separate from individuals Limited personal liability Continuity of management Easy to raise capital Readily transferable interests Possible separation of ownership and management
Disadvantages	Unlimited personal liability Difficult to raise capital Owner's salary cannot be treated as expense, hence, not tax deductible Difficult to transfer ownership	Unlimited personal liability Division of control/ authority Difficult to find compatible partners Difficult to raise additional capital Owners' salary/wage cannot be treated as expense, hence, not tax deductible	Difficult and expensive to form Subject to close government regulation Scope limited by corporate charter Inflexibility of operations Double taxation by paying both corporate and personal income taxes Cannot deducted operating losses against your income	Only one class of stock outstanding Difficult, costly formation Subject to close government regulation	Impermanence of existence Division of control/ authority Difficult to find compatible partners Difficult to raise additional capital Owners' salary/wage cannot be treated as expense, hence, not tax deductible	Difficult, costly formation Subject to close government regulation Scope limited by company charter