| Individual |
| S Corporation | Limited Liability Company | |
| Ownership | Individual | Any person or entity. | 1-100 shareholders. Subject to limited exceptions, shareholders must be individuals | Member can be any person or entity. |
| Legal Liability of Owners | Unlimited | Unlimited for General Partners. | Generally limited to assets of corporation. Assets transferred to corporation may be set aside if in defraud of creditors. | Generally limited to assets of LLC. Assets transferred to LLC may be set aside if in defraud of creditors. |
| Continuity of Entity | Limited to life of individual | Various events can cause a dissolution such as the death or bankruptcy of a partner | Perpetual | Perpetual |
| Transfer of Interest | Sale of Asset or by will. | Economic interest, if not restricted. To a new partner, unanimous consent of all general partners. | Stock transfer. A transfer tax may have to be paid. | Economic interest, if not restricted. If Agreement is silent, need majority of Members to consent to admit new member. A transfer tax may have to be paid. |
| Control | Absolute | Governed by Partnership Agreement. If Agreement is silent, most action is by majority vote (some requires unanimous vote). | Directors elected by Shareholders set policy. Officers manage day to day operations | Governed by the operating agreement. |
| Tax Year | Calender Year | Calender Year | Generally Calendar Year | Generally Calendar Year |
| Tax Filing Required | Information reported on Form 1040 and related Schedules | Form 1065 & IT-204, K-1s to partners. | Form 1120S & CT-3-S; K-1s to shareholders | If LLC is treated as a partnership, Form 1065 & IT-204; K-1s to members. Single member- Form 1040 & related Schedules. |
| Taxation of Income | Directly to Owner | Income is generally reported by partners (no double tax) | Income is generally reported by shareholders like a partnership (no double tax) | Income is generally reported by members like a partnership but could be taxed as a corp. (no double tax) |
| Estimated Start Up Costs | None | Various depending on complexity of Partnership Agreement. No formal partnership agreement is required. Must file a Certificate of Conducting Business as Partners with County Clerk. | Single Shareholder: $980 | Single Member: $1,900 (includes estimated publication costs) |
| Ongoing Entity Fees (There may be others depending on activity) | None | None. | Biennial: $9 Also, a fee of between $25 and $4,500 depending on the amount of New York source income. | Biennial: $9 Also, a fee of between $25 and $4,500 depending on the amount of New York source income. |
| Privacy | None | May have to produce partnership agreement to transfer property. | Generally, most corporate documents are not produced to transfer property | Generally, must produce Operating Agreement to transfer property |
| Major Advantage(s) | No formation & no ongoing entity fees | Minimum formation and no ongoing fees if there is no formal partnership agreement. | Limited liability. Ease of interest transferability, if not restricted | Limited liability. Greater flexibility in allocating income/losses. |
| Major Drawback(s) | Unlimited liability. | Unlimited liability. No free transferability of partnership interest. | Most entities do not qualify as a shareholder. Care must be taken when
using a trust for planning the estate of a shareholder having an
interest in an S Corporation to be sure it is a Qualified Subchapter S Trust (QSST) or Electing Small Business Trust (ESBT). Reasonable compensation may be required (See https://www.irs.gov/uac/Wage-Compensation-for-S-Corporation-Officers) Shareholders may be subject to Worker's Compensation Law (see New York Worker's Compensation Issues for Small Corporations) Lender's may require loans to be processed as commercial loans even with residential property. | More expensive to form. Transfers may be limited. All profits could be subject to self employment tax (See Chief Counsel Advice 201436049). Lender's may require loans to be processed as commercial loans even with residential property. |