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Comparison of LLCs, LLPs, and Professional Corporations

Do you know how an entity structure impacts your business? View this chart to see the differences between LLCs, LLPs, and Corporations.


 

 

Professional C corporation

Professional S corporation

Limited liability company (LLC) 1

 

Limited liability partnership (LLP)

Limited liability

Yes 2

Yes

Yes

Yes

 

Pass-through tax treatment

No

Yes

Yes

Yes

 

Difficult to form/maintain

Yes

Yes

Somewhat

Somewhat

 

Continuity of life

Yes

Yes

State law may limit LLC life to a set number of years 3

No

 

Centralized management

Yes

Yes

Generally yes, since members can elect a committee of managers

Generally no, but the partnership agreement can centralize somewhat

 

Interests freely sold/transferred

Only within specified profession(s) or specialty(ies)

Only within specified profession(s) or specialty(ies) and not to ineligible "S" shareholders

Yes, but transferee often has more limited rights, unless all other members approve sale/transfer

No

 

Available in all states

Yes

Yes

Yes

No

 

Minimum number of owners

One

One

Generally two

Two

 
  • 1Assumes that the LLC opts for tax treatment as a partnership.
  • 2Professionals remain liable for their own professional negligence.
  • 3Generally, termination dates for LLCs provided for under state law may be overridden in the LLC agreement.

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