Content for Chose your Business Structure Tile
| |Corporation |Limited Liability Company (LLC) |Partnership |Sole Proprietor |Non-Profit |
| |(C or S) | | | | |
|Who are the owners? |1+ Shareholders (owners) |1+ members (owners) |2+ partners (owners) |1 owner |No owners, governed by Board of Directors.|
|What are the governing documents? |Bylaws |Operating Agreement |Partnership Agreement |Business Plan |Bylaws |
| | | | |Recommended | |
|How is the business financed? |Sale of stock, retained profits |LLC member investments, retained profits |Partner investments, |Proprietor’s investment;|Grants, individual contributions/ |
| | | |retained profits |retained profits |donations, fees for services |
|Who is Liable? |Shareholders have limited liability for |Members (owners) have limited liability for|Unlimited personal liability|Unlimited personal |Directors/Employees are not personally |
| |debts of corporation |debts of the LLC |for debts of the business |liability for debts of |liable for debts of the business |
| | | |including your partners’ |the business and | |
| | | |actions |yourself | |
|Who receives profits? |Shareholders in proportions to investment |LLC members in proportion to investment, or|Partners in proportion to |Proprietor |Retained within the organization in |
| |(S-Corp) |by agreement |investment, or by agreement | |furtherance of non profit purposes. |
|What are the tax entity obligations |C-Corp pays taxes on income. Corporations |Choose to be taxed as a partnership/sole |Each partner reports and |Owner reports and pays |Nonprofit pays taxes on income unless |
|in RI? |are subject to the minimum corporate |proprietor- disregarded entity or a |pays share of taxes on |taxes on personal tax |tax-exempt. |
| |franchise tax of $500/year regardless of |corporation for income. LLC’s are subject |personal tax return. |return. | |
| |profit or loss. Shareholders pay taxes on |to the minimum corporate tax of $500/year | | | |
| |dividends. |regardless of profit or loss. | | | |
|Who pays income taxes on profit? |C Corp. pays profits, shareholders pay |LLC members pay individual rate, or can |Partners pay individual rate|Proprietor pays |With proper application, tax exempt |
| |individual capital gains rates on |elect to be taxed as a corporation | |individual rate | |
| |dividends; S Corp. stockholders pay | | | | |
| |individual rate on profit share and capital| | | | |
|What are the Department of State |Complete an initial application for |Complete an initial application for |No registration necessary. |No registration |Complete an initial application for |
|entity obligations in RI? |Articles of Incorporation, a filing fee of |Articles of Organization, a filing fee of | |necessary. |Articles of Incorporation, a filing fee of|
| |$230. A year after the initial filing you |$150. A year after the initial filing you | | |$35. A year after the initial filing you |
| |will need to submit an Annual Report yearly|will need to submit an Annual Report yearly| | |will need to submit an Annual Report |
| |for $50 per year. |for $50 per year. | | |yearly for $20 per year. |
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