Corporation v LLC in Texas

Sole Proprietorship vs Corporation vs LLC
  Sole Proprietorship C Corp S Corp Limited Liability Company (LLC)
Formation Requirements & Costs None Must file with state, state specific filing fee required Same as C Corp + file with IRS Must file with state, state specific filing fee required
Personal Liability Unlimited liability Shareholders are not typically held liable for the acts of the company or its agents Same as C Corp Members are not typically held liable for the acts of the company or its agents
Administrative Requirements Relatively Few Requirements Election of board of directors/officers, annual meetings, and
annual report filing requirements
Same as C Corp Relatively Few Requirements
Management Full Control Shareholders elect directors who manage business activities Same as C Corp Members can set up structure as they choose
Term Terminated when proprietor ceases doing business or upon death Perpetual: can extend past death or withdrawal of shareholders Same as C Corp May be perpetual
Taxation Entity not taxable. Taxed at the corporate rate. No tax at the entity level. Income passed
through to members.
No tax at the entity level. Income passed
through to members.
Double Taxation No Yes, taxed at corporate level and then again if distributed to
shareholders in the form of dividends
No No
Self-employment Tax Subject to self employment tax Salary subject to self employment tax Salary subject to self employment tax, but shareholder distributions are not subject to employment tax Salary subject to self employment tax
Pass Through Tax Treatment Yes No Yes Yes
Tax Forms 1040 1120 1120S + K-1 for shareholders 1040 or 1065 with K-1 for members
Transferability of Interest Must sell business Shares of stock are easily transferred (subject to securities laws) Must observe IRS regulations on who can own stock Possibly, depending on restrictions outlined in the operating agreement
Raising Capital Individual provides capital. Shares of stock are sold to raise capital (securities laws apply) Shares of stock are sold with more restrictions than C Corp May sell interests, but subject to operating agreement (securities laws may also apply).
Ease of Operation Easiest Must have annual meetings, Board of Directors meetings, corporate minutes, and stockholder meetings. Same as C Corp Easy
Registered Agent Not Required Required Required Required