This table summarizes the nontax factors for each entity type. Often, taxation is not as significant as nontax factors in the choice of business form.

Factor

Sole Proprietorship

Partnership

LLC

LLP

Corporation

S Corporation

Number of owners is restricted

Yes, restricted to 1

No must have more than one

No

No

No, certain states may have minimum

Yes, 100 owners maximum

Entity recognized as separate

No

Yes

 

Yes

 

 

 

Owners have limited liability

No

No Except limited partners

Yes

Yes, except for personal acts of malfeasance

Yes, except for professional services

Yes

 

Entity continues regardless or ownership changes

No

No

No

No

Yes

yes

Free transferability of ownership interest

Yes

 

No

No

No

Yes

Yes

Level of difficulty to form

Low

Low

 

 

Low

low

Relatively High

Relatively High

 

Organizational Cost

 

None

Moderate

Moderate

Moderate

Relatively High

Relatively High

Ability to raise capital

Limited

Good better for limited partnerships

Good

Good

Excellent

Excellent