Corporation v LLC in Texas

Sole Proprietorship vs Corporation vs LLC
 Sole ProprietorshipC CorpS CorpLimited Liability Company (LLC)
Formation Requirements & CostsNoneMust file with state, state specific filing fee requiredSame as C Corp + file with IRSMust file with state, state specific filing fee required
Personal LiabilityUnlimited liabilityShareholders are not typically held liable for the acts of the company or its agentsSame as C CorpMembers are not typically held liable for the acts of the company or its agents
Administrative RequirementsRelatively Few RequirementsElection of board of directors/officers, annual meetings, and
annual report filing requirements
Same as C CorpRelatively Few Requirements
ManagementFull ControlShareholders elect directors who manage business activitiesSame as C CorpMembers can set up structure as they choose
TermTerminated when proprietor ceases doing business or upon deathPerpetual: can extend past death or withdrawal of shareholdersSame as C CorpMay be perpetual
TaxationEntity 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 TaxationNoYes, taxed at corporate level and then again if distributed to
shareholders in the form of dividends
NoNo
Self-employment TaxSubject to self employment taxSalary subject to self employment taxSalary subject to self employment tax, but shareholder distributions are not subject to employment taxSalary subject to self employment tax
Pass Through Tax TreatmentYesNoYesYes
Tax Forms104011201120S + K-1 for shareholders1040 or 1065 with K-1 for members
Transferability of InterestMust sell businessShares of stock are easily transferred (subject to securities laws)Must observe IRS regulations on who can own stockPossibly, depending on restrictions outlined in the operating agreement
Raising CapitalIndividual provides capital.Shares of stock are sold to raise capital (securities laws apply)Shares of stock are sold with more restrictions than C CorpMay sell interests, but subject to operating agreement (securities laws may also apply).
Ease of OperationEasiestMust have annual meetings, Board of Directors meetings, corporate minutes, and stockholder meetings.Same as C CorpEasy
Registered AgentNot RequiredRequiredRequiredRequired