Advantages

Disadvantages

Sole Proprietorship

• Easy To Form

• Easy To Close

• No corporation paperwork needed

• Only needs to file personal return

• Few legal restrictions

• Personally Liable (Your personal assets at risk)

• Can not defer tax from any surplus or profit retention

• Can't bring in new owners or new capital from outside investors

• Business ends upon the death of owner. No continuity.

• All net profits are subject to Self Employment Tax

Partnership

• Ability to utilize multiple business owners.

• Simple to open.

• Establishes team work

• Possible to close with little or no additional taxation.

• Partners distributive income is subject to Self Employment Tax

• A partner is responsible for the another partners actions.

• Profit Sharing

• Disagreements among partners can hinder your business.

LLC

• Steer clear of some S Corporation Restrictions.

• Builds team work

• Avoid the double tax of profits.

• Self-employment tax can be taken on distributions rather than on whole profit.

•  Liability and other aspect may differ depending on state law.

• Profit Sharing

• Need at least two partners in order to establish.

• Disagreements among partners can hinder your business.

C Corporation

• Very easy to transfer or sell the business.

• Company can live on upon owners/shareholder's death.

• You are not personally liable

• Sell company stock to raise revenue.

• You are double taxed on profits.

• You must subject to many federal and state restrictions.

• Upon closure of the business, you may have to pay tax on company gains, and various dissolution fees

• Your corporate charter limits you business activities.

S Corporation

• No personal liability.

• Company can live on upon owners/shareholder's death.

• Raise money by selling stock

• Profits can pass through to the personal return without being subject to self-employment tax.

•  Difficulty when choosing a filing tax year.

• Contributions to pension plans are limited to amount shareholder receives in wages.

• Tax to all shareholders regardless whether they take a distribution.

• There are limits to the number of stockholders, which will limit outside capital.