Business Entity Comparison Chart

Business Entity Comparison Chart (NV) Maintained This Business Entity Comparison Chart (NV) summarizes key organizational, structural, and liability differences between C Corporations, S Corporations, Limited Liability Companies (LLCs), Limited Partnerships (LPs), General Partnerships (GPs), and Limited Liability Partnerships (LLPs) in Nevada, as well as the benefits and disadvantages of each entity type. For more information on Nevada's business entities generally, see: • Corporation Resource Kit (NV) 1• Limited Liability Company Resource Kit (NV) 1• Limited Partnerships and Limited Liability Limited Partnerships (NV) 1• General Partnerships (NV) 1• Limited Liability Partnerships (NV) See also the a Division of Corporations Fee Schedule from the Nevada Secretary of State website. Features C S Corporation Corporation Limited Liability Company Limited Liability (liability limited to the amount of investment) Yes (No personal liability of shareholders) Yes (No personal liability of shareholders) Yes (Liability of Members limited to their financial investments) Federal Tax Considerations No passthrough tax treatment— entity must file Form 1120 with IRS Pass-through tax treatment upon election by each shareholder as S Corporation by filing of Form 2553 with IRS Pass-through tax treatment —entity generally files Form 1065 with IRS as partnership. (As there is no business or personal income tax in Nevada, “double tax” on shareholder distributions is avoided) (No income tax collected on shareholder distributions as there is no corporate or personal income tax in Nevada. However, nonresident shareholders in Nevada may be subject to income tax for corporate (May be taxed as partnership, corporation, or may be disregarded depending on election made) Limited Partnership General Partnership Yes, for limited partner No (Partners have unlimited liability) No, for general partner Pass-through tax treatment — entity generally files Form 1065 with IRS as a partnership but may elect to be taxed as a corporation. (Because Nevada has no personal income tax, partners are not subject to state income tax on their share of partnership profits in his state of residence) Pass-through tax treatment — entity generally files Form 1065 with IRS as a partnership but may elect to be taxed as a corporation. (No tax on the partnership level, only at the individual partner level. However, since Nevada has no personal income tax, partners are not subject to Registered Limited Liability Partnership Yes (Partners are not responsible for the debts of LLP) Pass-through tax treatment — entity generally files Form 1065 with IRS as a partnership but may elect to be taxed as a corporation. (No tax on the partnership level, only at the individual partner level. However, since Nevada has no personal income tax, partners are not subject to state income tax on their share of dividends in their state of residence) state income tax on their share of partnership profits) Businesses with Nevada gross revenues in excess of $4,000,000 for the taxable year are subject to a commerce tax based on gross revenue the previous year partnership profits) $50 statement of partnership authority filing fee $75 Certificate of Registration fee Nevada Tax Considerations Businesses with Nevada gross revenues in excess of $4,000,000 for the taxable year are subject to a commerce tax based on gross revenue the previous year Businesses with Nevada gross revenues in excess of $4,000,000 for the taxable year are subject to a commerce tax based on gross revenue the previous year Businesses with Nevada gross revenues in excess of $4,000,000 for the taxable year are subject to a commerce tax based on gross revenue the previous year Businesses with Nevada gross revenues in excess of $4,000,000 for the taxable year are subject to a commerce tax based on gross revenue the previous year Formation-Related Fees Ranges from $75 to $35,000 depending on the value of the total number of the authorized shares. Ranges from $75 to $35,000 depending on the value of the total number of the authorized shares. $75 articles of organization fee $75 certificate of limited partnership fee Also subject to $200 state business license fee Also subject to $200 state business license fee Also subject to $500 state business license fee Shares of stock Also subject to $500 state business license fee Shares of stock Membership interests Partnership interests Partnership interests Partnership interests (as per underlying partnership structure) Managers or members General partner All partners Limited Partnership Agreement (not required, but recommended ) Limited unless provided for in partnership agreement. Partnership Agreement (not required, but recommende d) Partners, depending on underlying partnership structure Underlying Partnership Agreement (not required, but recommended ) Limited unless provided for in partnership agreement. Ownership Instrument Management Directors (delegate to officers) Management Document Bylaws Duration of Existence Perpetual Annual Meetings Charging Order Protection* Required Maybe (if it meets the requirements Directors (delegate to officers) Bylaws Operating Agreement Perpetual Can be perpetual or limited Required Maybe (if it meets the requirements Not required Yes Not required Yes May be subject to $200 state business license fee Businesses with Nevada gross revenues in excess of $4,000,000 for the taxable year are subject to a commerce tax based on gross revenue the previous year Also subject to $200 state business license fee Limited unless provided for in partnership agreement. Not required Not required Yes Yes Series of Stock** Strengths in Nev. Rev. Stat. Ann. § 78.746) Yes Longer history and larger body of case law therefore less uncertainty when making decisions in Nev. Rev. Stat. Ann. § 78.746) No Favorable tax treatment Limited liability Less expensive than corporation to establish and maintain No Simpler management structure than general partnership No Easy and inexpensive to establish and maintain Tax benefits Tax benefits Flexible ownership and management (member managed, or manager managed) If seeking to go public in the future, this entity is usually most desirable Few organizational formalities required Limited liability Eligible for dividends received deduction (a federal tax deduction on the dividends it receives from another corporation) Weaknesses No Limited liability Limited liability (for limited Partners) No Limited liability for partners of general partnership or general partner(s) of limited partnership Few organizational formalities required Business decisions may be easier than general partnership (no need to consult with limited partners for most decisions) Limited partners share in profits/losses without having to be heavily involved in management No dual taxation as the individual shareholder's distributive income is not subject to personal income tax Higher costs to establish and maintain Higher costs to establish and maintain Must maintain full corporate formalities Must maintain full corporate formalities Relatively new entity, therefore more uncertainty (little case law available) More periodic filing requirements than sole proprietorship s or general partnerships Not eligible for dividends received deduction that a Ccorporation is eligible for Unlimited liability for general partners (unless they organize as LLCs) Various limits and restrictions: Limited partners generally have Partners are jointly and individually liable for the actions of other partners and the partnership itself The partnership may have a limited life; ending upon the withdrawal or death of a Less flexibility than corporations in admitting new stakeholders or transferring ownership interests - Maximum of 100 shareholders - All shareholders must be US citizens or permanent residents - Cannot derive more than 25% of income from passive activities and - Can only have one class of shares fewer rights to participate in business than general partners partner * Note about charging order protection: charging order protection means that creditors of owners of these entities cannot seize the ownership interests of such owners but may only get a charging order against the distributions allocable to such interests. Nevada has one of the strongest protections as it provides that charging orders are the exclusive remedy for creditors wishing to attach a debtor's interest. Nevada is one of a minority of states that extend this protection to single-member LLCs and the first state to extend this protection to corporations that meet the requirements of Nev. Rev. Stat. Ann. § 78.746. ** Note about series of stock: This category does not refer to series LLCs (which are permitted in Nevada). Series of interests under a series LLC are treated as separate entities, to limit liability to other series or the whole LLC. Series of a class of stock—referred to in this row—are typically created to differentiate economic and voting rights within one entity or within one class of stock.