Let’s compare C corporations, S corporations, limited liability companies (LLCs), limited liability partnerships (LLPs), general partnerships, and sole proprietorships.

CHOOSING A BUSINESS STRUCTURE—HOW DO THEY COMPARE?
	C Corporations	S Corporations	LLCs* and LLPs	General Partnerships	Sole Proprietorships
Liability of owners	Limited, even if shareholders participate in management	Limited, even if shareholders participate in management	Limited, even if members participate in management	Unlimited for general partners; limited for limited partners who do not participate in management	Unlimited
Number of owners	No maximum	100 maximum	No maximum, usually a minimum of two**	No maximum, requires a minimum of two	One
Profit/loss and distributions	Special allocations permitted for separate classes of stock	No special allocations permitted	Special allocations permitted	Special allocations permitted	N/A
Transferability of interests	No restriction	No restriction, but must be to eligible shareholder or "S" status terminates	Restricted, typically requires approval of majority of members	Generally restricted unless authorized by agreement	N/A
Federal income taxes	Taxed at corporate level, a flat 21%, plus tax on dividends to shareholders	No corporate level tax (unless previously a C corporation)***	None at LLC or LLP level***	None at partnership level***	Taxed on individual return***
Continuity of life	Unlimited	Unlimited	Limited	Limited	N/A
Avoidance of double taxation	No	Usually	Yes	Yes	Yes
Tax forms to file	Form 1120	Form 1120S	Form 1065	Form 1065	Form 1040 Schedule C

* LLCs are treated as a partnership for tax purposes.

** Single-member LLCs that do not elect to be corporations will be classified as a "disregarded entity" for tax purposes.

*** Owners of business entities, which are not taxed as "C" corporations, are eligible for a 20% Qualified Business Income (QBI) dedication. The deduction for QBI may be limited and/or subject to phase-out, depending on the taxable income of the individual, as well as such factor as the type of business, amount of wages paid by the business, and amount of capital assets owned by the business. For income above $326,600, the legislation phases in limits on what otherwise would be an effective marginal rate of not more than 29.6%.