Information of New Business Formation
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Characterist
ics
 Sole
Proprietor
ship
 S Corporation
 C Corporation
 Limited Liability
Company
Ease of
formation
   Article of Incorporation issued by
state, have by laws, and minutes of
meetings
 Same as S corporation
 Article of organization
issued by state
Limits of
liability
 Personally
liable for
debts of
business
 Limited to capital stock obligations
 Same as S corporation
 Members have limited
liability comparable
to limited partners or
shareholders
Taxability
 Earnings
reported on
individual’s
return
 Profits passed through to
shareholders' personal income,
except certain capital gains
 Pays taxes on income at
corporate level
 Profits passed through
members to their
personal income
Tax
imposed
upon
 Individual
 Passed to shareholders
 Paid by corporation
 Paid by members
Limitation –
losses
 Total of
other
income
 Pass-through of ordinary losses
limited to basis of shareholders’
stock plus shareholders’ loan to
corporation
 Losses may be carried back
for refund or forward to
reduce future taxable
income of corporation
 Losses limited to
allocable share of
LLC losses to extent of
tax basis in LLC
interest including
allocable share of
LLC debt
Person who
must report
income or
losses
 Proprietor
 Shareholder
 Corporation
 Member
Fee to form
a business
(pay to
government
)
 $ 125
 $ 175
 $ 175
 $ 500
Chicago Downtown office:
180 N. Stetson Ave,
Suite 3500
Chicago, IL 60601

Naperville Office:
1220 E. Iroquois Ave,
Suite 201
Naperville, IL 60563

Ph: (312) 450-2347       
Fax: (312) 253-4443
info@prominentcpa.com
Prominent CPAs and Associates, LLC.
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