| Formation | No agreement required | Agreement of parties involved. No permission required. | File with state for permission | File with state for permission | File with state for permission |
| Duration | Dissolved by death of owner or bankruptcy | Dissolved by death of owner or bankruptcy | Typically limited to a fixed amount of time | Perpetual | Perpetual |
| Liability | Sole proprietor has unlimited liability | Partners have unlimited liability | Members not typically liable for the debts of the LLC | Shareholders are typically not personally liable for the debts of the corporation | Shareholders are typically not personally liable for the debts of the corporation |
| Simplicity of Operation | Relatively few legal requirements | Relatively few legal requirements | Some formal requirements but less formal than corporations | Formality of board of directors, officers, annual meetings, and annual reporting | Formality of board of directors, officers, annual meetings, and annual reporting |
| Management | Sole proprietor decides everything | Typically each partner has an equal voice unless otherwise arranged | Members have operating agreement that outlines management | The corporation is managed by the board of directors who are elected by the shareholders | The corporation is managed by the board of directors who are elected by the shareholders |
| Taxation | Sole proprietor pays taxes on his/her own tax return | Each partner pays tax on his/her share of the income and can deduct losses against other sources of income | If properly structured there is no tax at the entity level. Income/loss is passed through to the members of the LLC | No tax at entity level. Income/loss is passed through to the shareholder | Corporation is a taxable entity |
| Pass Through Income/Loss | Yes | Yes | Yes | Yes | No, corporate losses can't be deducted by shareholder |
| Double Taxation | No | No | No | No | Yes |
| Cost of Creation | None | None | Filing fee with the state | Filing fee with the state | Filing fee with the state |
| Raising Capital | No | Contributions from partners or an addition of more partners | Possible to sell interests. Subject to operating agreement restrictions | Sell shares of stock to raise capital | Sell shares of stock to raise capital |
| Transferability of Interest | No | No | Possible | Yes, subject to consent | Shares of stock in a corporation are easily transferable |
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