General Business Structure Chart Not all entity types could be represented within this chart. Consult your attorney for specific entity structures.
Corporation Limited Liability Com- General Partnership Sole Proprietor Non-Profit (C or S*) (Benefit) pany (LLC)(L3C) Who are the owners? 1+ Shareholders (owners) 1+ members (owners) 2+ partners (owners) 1 owner No owners, governed by Board of Directors (minimum of 3 directors) What are the Bylaws Operating Agreement Partnership Agreement Business plan Bylaws governing recommended documents? How is the business Sale of stock, retained profits LLC member investments, Partner investments, Proprietor’s investment; re- Grants, individual financed? retained profits retained profits tained profits contributions/donations, fees for services
Who is liable? Shareholders have limited Members (owners) have limited Unlimited personal liability for Unlimited personal liability Directors/Employees are not liability for debts of liability for debts of the LLC debts of the business including for debts of the business and personally liable for debts of corporation your partners’ actions yourself the business
Who receives C-Corp: Subject to LLC members in Partners in proportion to Proprietor Retained within the profits? distributions to Shareholders. proportion to investment, or by investment, or by organization in furtherance of S-Corp: Shareholders in agreement agreement non profit purposes propertion to investment What are the entity tax C-Corp pays taxes on income, Choose to be taxed as a part- Each partner reports and pays Owner reports and pays taxes Tax exempt status granted after obligations in RI? corporations are subject to the nership/sole share of taxes on personal tax on personal tax return application to the US Internal minimum corporate franchise proprietor - disregarded entity return Revenue Service. tax of $500/year regardless of or a corporation for income, profit or loss, shareholders pay LLC’s are subject to the min- taxes on dividends imum corporate tax of $500/ year regardless of profit or loss
Who pays income tax- C-Corp pays profits, LLC members pay Partners pay individual rate Proprietor pays individual rate After application and receipt of es on profit? shareholders pay individual individual rate, or can elect to non-profit status from the IRS, capital gains rates on be taxed as a corporation tax exempt. dividends; S Corp. stockholders pay individual rate on profit share and capital
What are the Complete an initial Complete an initial No registration necessary No registration necessary Complete an initial Department of State application for Articles of application for Articles of application for Articles of Incorporation, a filing fee of Organization, a filing fee of Incorporation, a filing fee of entity filing obligations $230; one year after the initial $150; one year after the initial $35; one year after the initial in RI? filing you will need to submit filing you will need to submit filing you will need to submit an an annual report yearly for $50 an annual report yearly for $50 annual r per year. per year eport yearly for $20 per year
* S-Corps required to file S-Election with the Internal Revenue Service Information provided by: Everett Petronio, Jr., Kalander & Shaw, Ltd. Judy Hetherman, CPA, CHBC, Judith Hetherman & Co., CPAs