If you’re curious about which business license is the best choice for your company, this chart summarizing the differences between the type of business licenses.

Note: Please consult your accountant and/or lawyer before making a decision.

Chart summarizing the differences between the type of business licenses
CharacteristicsSole ProprietorshipGeneral PartnershipLimited Liability CompanyS Corp.C Corp.
FormationNo permission requiredNo permission requiredFile with state for permissionFile with state for permissionFile with state for permission
DurationDependent on sole proprietorDissolved by death of partner Limited to a fixed amount of timePerpetualPerpetual
LiabilitySole proprietor has unlimited liabilityPartners have unlimited liabilityNot personally liable for the debts of the companyNot personally liable for the debts of the corporationNot personably liable for the debts of the corporation
Simplicity of OperationRelatively few legal requirementsRelatively few legal requirementsSome formal requirements but less than corporationsFormal. Board of directors, officers, annual meetings and reportsFormal. Board of directors, officers, annual meetings and reports
ManagementFull control of management and operationsEach partner has an equal voice unless otherwise arrangedOperating agreement that outlines managementManaged by the board of directors who are elected by shareholders Managed by the board of directors who are elected by shareholders
TaxationNo taxable entity. Sole proprietor pay all taxesEach partner pays tax on his/her share of the income and deduct losses Can be structured to be taxed either as partnership or corporationNo tax at entity level. Income/loss is passed through to shareholdersCorporation is a taxable entity.
Pass Through Income/ LossYesYesYesYesNo, corporate losses can't be deducted shareholder
Double TaxationNoNoNoNoYes
Cost of CreationNoneNoneFiling fee with the stateFiling fee with the stateFiling fee with the state
Raising CapitalDifficult, unless individual puts in moneyContributions from partners or an addition of more partnersSubject to operating agreement restrictionsSell shares of stock to raise capitalSell shares of stock to raise capital
Transferability of InterestNoNoPossiblyYes, subject to consentYes, easily transferable