Comparison of Entities

CHARACTERISTIC	Sole Prop.	S Corp	C Corp	Ptnrshp	LLC
1. Limited liability	no	yes	yes	no	yes
2. Lower IRS audit risk	no	yes	depends*	yes	depends**
3. Percent of returns audited	1.64%	.48%	1.64%*	0.47%	depends**
4. Number of owners	1	1-100	1 or more	>1	1 or more
5. Can have more than one class of stock	NA	no	yes	yes	yes
6. Easily select year end other than 12/31	no	no	yes	no	no
7. Can deduct 100% of owners health insurance	yes	yes	maybe	maybe	maybe
8. Deduct owner's group term life of $50k	no	no	yes	no	no
9. Able to use lower corporate tax rate	no	no	yes	no	no
10. Earnings are not double taxed	yes	yes	no	yes	yes
11. No double tax upon liquidation	yes	yes	no	yes	yes
12. Reduce FICA tax through distributions	no	yes	no	no	maybe
13. Can avoid FICA for owner's children under 18	yes	no	no	no	no
14. Can deduct business losses on personal return	yes	yes	no	yes	yes
15. Can allocate income disproportionate to ownership	NA	no	no	yes	yes
16. Inexpensive to form and maintain	yes	no	no	maybe	maybe
17. Can easily distribute investment back to owners	yes	yes	no	yes	yes
18. Existence of reliable case law	yes	yes	yes	yes	no
19. Not subject to Florida 5.5% income tax	yes	yes	no	yes	yes
20. Not subject to Texas franchise (income) tax	yes	depends***	depends***	yes	depends***
21. Appreciated property distributions are not taxable	yes	no	no	yes	yes

Note: A "yes" answer suggests a favorable outcome. A "no" answer suggests an unfavorable outcome.
*% of audits for C corps with assets over $10 million was 17.5%.
**LLCs can be taxed as partnerships, sole proprietors or corporations.
***No TX franchise tax for entities with annulized revenues less than $1,230,000.