Business Entity Types Comparison: LLC, S-Corp, C-Corp, Sole Prop & Partnership
A side-by-side reference table comparing five U.S. business structures across liability, tax, cost, compliance, equity, and fit.
Choosing a business structure changes how much personal liability you carry, how you are taxed, what you pay to set up, and how easily you can bring on investors. The table below compares the five most common U.S. structures on the six dimensions founders actually weigh. State rules vary, so treat this as a starting map — not a substitute for advice from a licensed attorney in your state.
| Dimension | Sole Proprietorship | LLC | S-Corp | C-Corp | Partnership |
|---|---|---|---|---|---|
| Liability protection | None — owner is personally liable for all business debts and lawsuits. | Full separation — personal assets are shielded from business creditors. | Full separation (an election on a corp or LLC) — personal assets shielded. | Strongest separation — shareholders liable only up to their investment. | General partners are personally liable; limited partners are shielded. |
| Taxation | Pass-through; owner pays self-employment tax of 15.3% on net profit. | Pass-through by default; members pay 15.3% self-employment tax. An S-corp election can lower it. | Pass-through; owner must take a reasonable W-2 salary, the rest is K-1 profit (not subject to self-employment tax). | Double taxation — 21% corporate rate, then dividends taxed again at the individual rate. | Pass-through; each partner pays self-employment tax on their share. |
| Setup cost | About $0–$50 (a DBA or local license at most). | $50–$500 state filing plus an annual franchise tax that varies by state. | Form a corp/LLC first, then file IRS Form 2553; legal and payroll admin cost, no separate state fee. | $50–$500 filing plus formal stock issuance; a bit more than an LLC. | Low — a partnership agreement; some states require registration. |
| Compliance burden | Minimal — report profit on your personal return (Schedule C). | Low to moderate — annual report and franchise tax in many states. | Moderate — run payroll for the owner, file Form 1120-S, follow reasonable-comp rules. | Highest — board meetings, minutes, Form 1120, strict corporate formalities. | Moderate — file Form 1065 and issue K-1s to partners. |
| Equity & investor limits | One owner; cannot issue stock or take outside investors. | Flexible membership; can admit members but awkward for venture capital. | Max 100 shareholders, all U.S. individuals, one class of stock — blocks most VC. | Unlimited shareholders, multiple stock classes, foreign owners allowed — VC preferred. | General and limited partners; limited partners can invest capital. |
| Best for | Low-risk solo side business, or a tester before formalizing. | Most small businesses wanting a liability shield with simple taxes. | Profitable service businesses where a salary/dividend split saves self-employment tax. | Startups raising venture capital, or keeping earnings inside the company. | Two or more people jointly running a business. |
This is a reference overview, not legal or tax advice. Read the focused comparisons below for the trade-offs that matter to your situation, then confirm the details with a professional in your state.
Note: This comparison is educational reference, not legal advice (非法律建议). Entity and tax rules differ by state — confirm with a licensed attorney in your state before choosing a structure.