| Entity Types | Annual Renewal (UBR) Fee | Name Exclu-sivity | Corporate Formalities | Tax Characteristics | Typical Use | Gotchas |
| C Corporations | $150 | Yes | Minutes of Organizational Meeting, Bylaws, Annual Board of Directors Meetings | Pays Own Income Tax on Gains at Graduated Rates, any Losses are “trapped” inside, and any dividends are taxable to Owners | Large Businesses, Publicly-traded Businesses,Small Businesses Intending to Grow by Retaining Capital for purposes of Expansion | Profits will be taxed at the Entity Level and Shareholder Level (often misleadingly-termed “double taxation”—it’s less than double), Losses will be “trapped” inside the entity as “carryforwards” to offset future profits (and will expire at a future time if unused) |
| S Corporations | $150 | Yes | Minutes of Organizational Meeting, Bylaws, Annual Board of Directors Meetings | Gains or Losses Pass Thru to Owner(s) | Small Businesses (under $5 million) wishing to minimize entity-level tax | Potential for “phantom income” to owners (profits not paid out still show up on 1040), lack of flexibility in capital structure: ownership percentage fixes gain percentage and loss percentage of any shareholder, additionally all owners must be U.S. persons |
| LLC Sole Proprietorship | $50 | Yes, but due to change in the law, older LLCs with the same name can be found, valid and existing on the state's records | Operating Agreement not needed | Gains or Losses Pass Thru to Owner | Individual wishing to minimize tax-related paperwork (files Schedule C with 1040 form), or needing entity simply for Workers’ Comp Insurance exemption purposes | No separation between business and personal tax picture – since both business and personal taxes are on same return, an audit of one side can easily “jump the fence” and involve issues on the other side |
| LLC Partnership | $50 | Yes - Same as above | Operating Agreement | Gains or Losses Pass Thru to Owners | Business having multiple owners but wishing to minimize corporate formalities, or having stakeholders who should be treated differently for tax purposes (e.g. money partner, working partner, partner contributing property) | Using true “partnership accounting principles” rather than the S Corp’s “partnership in a straitjacket” adds complexity. Must follow IRS “substantial economic effect” rules if ownership interests vary from profit and loss interests. |
| LLC S Corporation | $50 | Yes - Same as above | Operating Agreement | Gains or Losses Pass Thru to Owner(s) | Business having multiple owners but wishing to minimize corporate formalities, but wanting to pay some money out as salary to shareholders while paying the rest as dividends (not subject to social security and medicare tax) | If too much of what is paid out to owners is classified as dividends and salary is clearly nominal (tiny by comparison), IRS may recharacterize some dividends as salary, resulting in additional tax and penalties |
| LLC C Corporation | $50 | Yes, Same as above | Operating Agreement | Pays Own Income Tax on Gains at Graduated Rates, any Losses are “trapped” inside, and any dividends are taxable to Owners | Businesses wishing to minimize corporate formalities while retaining earnings & profits for planned future growth. | Profits will be taxed at the Entity Level and Shareholder Level (often misleadingly-termed “double taxation”—it’s less than double), Losses will be “trapped” inside the entity as “carryforwards” to offset future profits (and will expire at a future time if unused) |
Getting Started 
