Corporate Entities Compared

Limited Liability Partnership "S" Corporations General Partnership Sole Proprietorship
Personal Liability of Owners Partners are not liable for acts, errors, omissions, malpractice, malfeasance or negligence of others unless they supervised or were involved. In most LLP states, partners are liable for contractual obligations Limited, except for an individual's own professional errors Unlimited Unlimited
Federal Income Tax Treatment Partnership taxation Single level of taxation Single level of taxation Single level of taxation
Permitted Number of Owners Unlimited Limited to 75 Unlimited One
Permitted Types of Owners No Restrictions Limited to individuals, estates and certain trusts No Restrictions Individual 
Permitted Classes of Ownership Interests Multiple Classes are permitted You can have only one class of stock. The S Corporation is treated as having only class of stock if all outstanding shares of the corporation possess identical rights to distribution and liquidation proceeds. Differences in voting rights are allowed if the above requirements are met. Multiple Classes are permitted N/A
Duration of Entity  Limited May be Perpetual  Limited Limited
Special Allocation of Tax Items Permitted Not Permitted Permitted is partnership tax treatment applies N/A
Centralized Management  Managed by General Partners  Managed by a board of directors and officers Managed by General Partners  N/A
Transferability of Interests  Generally limited by State Law and partnership agreement  Usually limited by shareholder agreement; must comply with subchapter S tax requirements Generally limited by State Law and partnership agreement  N/A
Necessary Documentation  Usually a partnership agreement and annual registration Articles of incorporation; bylaws; minutes Usually a Partnership agreement  Minimal
Regulation of Issue and sale of Interests  Interests in LLPs are probably not securities; interests in limited liability limited partnerships probably are securities Federal and state securities law; state corporation laws State Partnership Taxes N/A