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part2chart.docxTypes of Legal Ownership
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Ownership Structures |
Sole Proprietor |
General Partnership |
Limited Liability Company (LLC) |
Corporation |
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Number of Owners |
|
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One or more |
Multiple |
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Formation Difficulty |
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Low |
Medium |
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Liability |
Sole proprietor has unlimited liability. |
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Officers/shareholders are not typically responsible for the debts of the corporation. |
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Operational Requirements |
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There are relatively few legal requirements. |
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Formal board of directors, annual meetings, and annual reporting required. |
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Management |
Sole proprietor has full control of management and operations. |
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Members have an operating agreement that outlines management. |
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Federal Taxation |
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It is not a taxable entity. Each partner pays tax on his/her share of income and can deduct losses against other sources of income. |
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It is taxed at the entity level. If dividends are distributed to shareholders, they are also taxed at the individual level.
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