proprietorship advantages

					                               Comparison/Contrast on Legal Forms of Organization
                            Proprietorship                      Partnership                  Corporation (S or C)                         LLC
Best Suited For:      Single owner business            Business with partners           Single or multiple owner           Single or multiple owner
                       where taxes or product            where taxes or product            business where owner(s)             business where owner(s)
                       liability are not a concern       liability are not a concern       need(s) company funded              need(s) limited liability but
                                                                                           fringe benefits and liability       want to be taxed as a
                                                                                           protection                          partnership
Type of Entity:       Inseparable from owner           Inseparable from owner           Separate legal entity              Separate legal entity
                                                         but can have debt or
                                                         property in its name
Main                  Inexpensive to set up            Inexpensive to set up            Limited liability                  Limited liability
Advantages:           Few administrative duties        Few administrative duties        Company paid fringe                Pass-through entity
                                                                                           benefits (C corp.)                 Unlimited number of owners
                                                                                          Tax savings through                Capital is easy to raise
                                                                                           income splitting (C corp.)          through sale of interests
                                                                                          Capital is easy to raise
                                                                                           through sale of stock
Main                  Unlimited liability              Unlimited liability, also        Can be costly to form              Can be costly to form
Disadvantages:        No tax benefits                   liable for partners’ acts        More administrative duties         More administrative duties
                      Business dissolves upon          No tax benefits                  S Corp. limited to 35
                       death of owner                   Legally dissolves upon            shareholders
                                                         change or death of
                                                         partner
Taxes:                Owner is responsible             Partners are responsible         C Corp. pays its own               Usually taxed as a
                      File Schedule C with Form        File Form 1065                   S Corp. passes through to           partnership, but can be taxed
                       1040                                                                owners                              as a corp. in some states
                                                                                          File C Corps file 1120S            Usually form 1065



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