TYPE OF ENTITY

LIABILITY

FEDERAL AND PENNSYLVANIA TAXATION

RESTRICTIONS

 OTHER         

 ISSUES

"C" CORPORATION

OWNERS NOT PERSONALLY LIABLE FOR BUSINESS DEBTS

SUBJECT TO FEDERAL TAX; PA NET INCOME TAX AND CAPITAL STOCK TAX

NONE

MUST FOLLOW CORPORATE FORMALITIES

"S" CORPORATION

OWNERS NOT PERSONALLY LIABLE FOR BUSINESS DEBTS

INCOME TAXED TO OWNERS NOT TO CORPORATION FOR FEDERAL AND PA INCOME TAX;

SUBJECT TO PA CAPITAL STOCK TAX

LIMIT ON NUMBER AND TYPE OF SHAREHOLDERS

AND CLASSES OF STOCK

certain rules may apply if excess passive income; MUST FOLLOW CORPORATE FORMALITIES

LIMITED LIABILITY COMPANY

 (LLC)

OWNERS NOT PERSONALLY LIABLE FOR BUSINESS DEBTS

If single member – disregarded entity for income tax purposes –all income taxed to owner (individual or corporation);

2 or more members – can elect to be taxes as a corporation or as a partnership

Regardless of number of members or partnership/corporate income taxation LLC is subject to Pennsylvania capital stock tax``

NONE

Need 2 or more members to be recognized as a separate entity for income tax purposes

NEED TO FILE STATE ELECTION TO FORM;

Restricted Professions(Law, Medicine and Accounting) not taxed as corp. for PA

GENERAL PARTNERSHIP

OWNERS PERSONALLY ARE  LIABLE FOR ALL PARTNERSHIP DEBTS

INCOME TAXED TO OWNERS FOR FEDERAL AND PA TAXES;

NO SPECIAL STATE FILING OR FEES

NEED 2 OR MORE PARTNERS

May need to pay PA withholding tax for non-resident partners

LIMITED PARTNERSHIP

LIMITED PARTNERS NOT LIABLE FOR PARTNERSHIP DEBTS;

GENERAL PARTNER PERSONALLY LIABLE FOR ALL PARTNERSHIP DEBTS

TAXED THE SAME AS GENERAL PARTNERSHIPS

(some special allocation rules may apply with respect to allocation of losses)

NEED AT LEAST 1 GENERAL PARTNER AND 1 LIMITED PARTNER

Must file state form to organize

LIMITED LIABILITY PARTNERSHIP

PARTNERS NOT PERSONALLY LIABLE FOR TORTS (injury to others including malpractice) IN WHICH PARTNER IS NOT PERSONALLY INVOLVED IF MINIMUM INSURANCE IS CARRIED; ALL PARTNERS PERSONALLY LIABLE FOR ALL OTHER DEBTS OF PARTNERSHIP

TAXED THE SAME AS GENERAL PARTNERSHIPS

must carry insurance at least equal to $100,000 for each general partner, up to $1,000,000 maximum

ANNUAL FEE TO PA OF $240 PER RESIDENT PARTNER;

MUST FILE STATE FORM TO ELECT