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