Forming a business entity can be a wise decision. Many businessmen and women put off the creation of a formal entity only because they don't know what type of company best suits their needs. In our comparison chart, you can assess the characteristics of different types of companies, and then decide which type best suits your needs.

Advantages
& Limitations

C Corporation

Subchapter S Corporation

Limited Liability
Company

(What most corporations
are by default)

(A special corporation owned
by only a few persons)

Double Taxation**

Yes

No
(Although it sometimes
does on state taxes)

No
(Unless the owners choose
to set it up differently)

Protects owners from
personal liability

Yes

Yes

Yes

Can sell different classes
of ownership in the company

Yes

No

Yes

Has tax exemptions

No

Yes
(From self employment
tax on profits)

No

Limit on number of owners

No

Yes (No more than 75)

No

Can be owned by other
companies or trusts

Yes

No

Yes

Can own other businesses

Yes

Some restrictions apply

Certain business types such as
banks and insurance companies
cannot be owned by LLC's