Comparison Table

Warning: This Comparison Table has been prepared using several sources of information, all available in the public domain. However, considering that laws and their interpretation are changing on a regular basis, CorpoMax can by no means guarantee the accuracy of the information contained herein. It is thus strongly recommended to contact a lawyer, an accountant, a tax expert or any other qualified professional in order to obtain specific advice related to your particular situation.

Delaware

C Corporation (General)

Close Corporation

S Corporation

Limited Liability Company (LLC)

Creation

By statutory authorization (after filing with the State)

By statutory authorization (after filing with the State)

By statutory authorization (after filing with the State))

By statutory authorization (after filing with the State)

Constituent Document

Certificate of Incorporation

Certificate of Incorporation

Certificate of Incorporation

Certificate of Formation

Legal Status

Separate legal entity

Separate legal entity

Separate legal entity

Separate legal entity

Duration

Perpetual

Perpetual

Perpetual

Perpetual or limited to a determined (e.g. 50 years) or determinable (e.g. death or leave of a member) period of time

Corporate Name

Must ending by Corp., Inc., Co., Ltd. or other (Details)

Must ending by Corp., Inc., Co., Ltd. or other (Details)

Must ending by Corp., Inc., Co., Ltd. or other (Details)

Must ending by LLC, L.L.C. or Limited Liability Company (Details)

Address of Headquarters

Anywhere in the world

Anywhere in the world

Anywhere in the world

Anywhere in the world

Obligation to be represented in the State

Yes, through a registered agent

Yes, through a registered agent

Yes, through a registered agent

Yes, through a registered agent

Minimal Number of Shareholders or Members

One

One

One (husband and wife are considered as only one shareholder)

One

Maximal Number of Shareholders or Members

Unlimited

30

100

Unlimited

Minimal Number of Directors or Managers

One

One

One

N/A

Minimal Number of Officers (e.g. President, Vice-President, Secretary, Treasurer)

One

One

One

N/A

Restrictions about Type of Shareholders or Memberss

No. Any natural or legal person may be a shareholder.

No. Any natural or legal person may be a shareholder.

Yes. Only a natural person, an estate and a some type of trust may be a shareholder.

No. Any natural or legal person may be a member.

Restrictions about Residency of Shareholders or Members

No. Any non-US resident may be a shareholder.

No. Any non-US resident may be a shareholder.

Yes. US citizenship or residency required.

No. Any non-US resident may be a member.

Restrictions About Subsidiaries

Yes. Cannot have a S Corporation as subsidiary.

Yes. Cannot have a S Corporation as subsidiary.

Yes. Cannot Be a Subsidiary of a C or Close Corporation. Cannot be a subsidiary of a S Corporation except if 100% owned. Other restrictions applicable.

No

Personal Liability for Shareholders or Members (in general)

No liable for Corporation's debts and obligations

No liable for Corporation's debts and obligations

No liable for Corporation's debts and obligations

No liable for LLC's debts and obligations

Protection of Anonymity for Shareholders or Members

Yes

Yes

Yes

Yes

Protection of Anonymity for Directors or Managers

Yes

Yes

Yes

Yes

Agency

Shareholder is neither a principal nor an agent of the Corporation.

Shareholder is neither a principal nor an agent of the Corporation.

Shareholder is neither a principal nor an agent of the Corporation.

Member is not a principal of the LLC but may be its agent.

Flexibility of Financial Structure

Unlimited. Possibility of several classes of shares.

Unlimited. Possibility of several classes of shares.

Limited. Possibility of only one class of shares (but may include voting and non-voting shares).

Unlimited. Possibility of several categories of units.

Formalism

Important formalism: shareholders and directors meetings, annual report, etc.

Important formalism: shareholders and directors meetings, annual report, etc.

Important formalism: shareholders and directors meetings, annual report, etc.

Formalism less important. Usual corporate formalities (e.g. minutes, bylaws, meetings, etc.) can be eliminated in the LLC Operating Agreement.

Requirements of Form

Yes. By-laws and minutes must be made in writing.

Yes. By-laws and minutes must be made in writing.

Yes. By-laws and minutes must be made in writing.

No. The LLC Operating Agreement may be verbal or written.

Linguistic Requirements

Yes. Corporate documents must be written in English.

Yes. Corporate documents must be written in English.

Yes. Corporate documents must be written in English.

No. The LLC Operating Agreement may be written (if so) in any language.

Management

Management by the Board of Directors, elected by shareholders

Management by the Board of Directors, elected by shareholders

Management by the Board of Directors, elected by shareholders

Management by members or by managers, according to the LLC Operating Agreement

Rules of Operation

Stated by the corporation by-laws

Stated by the corporation by-laws

Stated by the corporation by-laws

Stated by the LLC Operating Agreement

Time to Adopt Rules of Operation

After incorporation of the Corporation

After incorporation of the Corporation

After incorporation of the Corporation

Before or after formation of the LLC

Annual Obligations

1) Filing of the annual report 2) Payment of the annual report filing fee (US$25) 3) Payment of the Franchise Tax

1) Filing of the annual report 2) Payment of the annual report filing fee (US$25) 3) Payment of the Franchise Tax

1) Filing of the annual report 2) Payment of the annual report filing fee (US$25) 3) Payment of the Franchise Tax

Payment of the LLC Tax

Franchise or LLC Tax Amount

US$35 (for a maximum authorized capital of 3,000 common shares)

US$35 (for a maximum authorized capital of 3,000 common shares)

US$35 (for a maximum authorized capital of 3,000 common shares)

US$200

Delay for Filing the Annual Report

March 1

March 1

March 1

N/A

Delay for Paying Franchise Tax or LLC Tax

March 1

March 1

March 1

June 1

Legal Proceedings

The Corporation may sue and be sued in its own name.

The Corporation may sue and be sued in its own name.

The Corporation may sue and be sued in its own name.

The LLC may sue and be sued in its own name.

Taxation

Tax payable by Corporation

Tax payable by Corporation

No tax payable by Corporation

Tax payable by membres, except if they have decided that it would be payable by the LLC.

Tax Pass Through Shareholders or Members

No

No

Yes. The Corporation's profits and losses are allotted to Shareholders.

Yes. The LLC's profits and losses are allotted to Members.

Double Taxation

Yes

Yes

No

No

Deduction of Operation Losses by Shareholders or Members

No

No

Yes

Yes (active members only)

Termination of Special Tax Status

Non-applicable

Non-applicable

Yes, Upon Specific Events

No, except if Members have decided that tax would be payable by the LLC.

Possibility of Income Allocation

No. Income is allotted to the Corporation exclusively.

No. Income is allotted to the Corporation exclusively.

No. Income must be allotted strictly by stock ownership percentage.

Yes. Income can be shared among Members, in the proportions agreed upon between them.

Tax Flexibility (Profit Sharing)

Yes. No obligation to immediately share profits between shareholders (through dividends).

Yes. No obligation to immediately share profits between shareholders (through dividends).

No. All profits (after salaries) are shared between shareholders during the current year.

No. All profits (after salaries) are shared between members during the current year.

Choice of Tax Year

Yes

Yes

No. Must end on December 31, with certain exceptions.

Yes

Raising Capital

Possible by issuing and selling shares

Possible by issuing and selling shares

Possible by issuing and selling shares

Possible to sell his interest but subject to the LLC Operating Agreement

Restrictions About Source of Income

No

No

Yes. Maximum of 25% of total income may come from passive activities (annuities, dividends, rents, royalties, etc.)

No

Transfer of Shares or Interest

Shares Easily Transferable

Shares Transferable Under Certain Conditions (Directors or Shareholders Approval)

Same as C Corporation C or Close Corporation (as the case may be)

Participation More Difficult to Transfer (e.g. Other Members Approval)

Protection Against Creditors

No. Shares can be seized by Shareholders' creditors.

No. Shares can be seized by Shareholders' creditors.

No. Shares can be seized by Shareholders' creditors.

No. Interest can be seized by Members' creditors.

Employment Taxes (Social Security and Medicare)

Salaries subject to taxes. Dividends not subject to taxes.

Salaries subject to taxes. Dividends not subject to taxes.

Salaries subject to taxes. Dividends not subject to taxes.

Salaries and profits usually subject to taxes (except for passive members of an LLC managed on a centralized manner).

Right to Grant Fringe Benefits (Pension Fund, Stock Options, Employee Stock Purchase Plan)

Yes

Yes

Yes

No

Taxation of Some Fringe Benefits (Group Life Insurance, Medical Expense Reimbursement Plan, Medical Insurance Premiums, etc.)

No

No

Yes (except employees who own 2% or less of corporation shares)

Yes

Right to Merge with a C, Close or S Corporation from Delaware

Yes

Yes

Yes

Yes

Right to Merge with a C, Close or S Corporation from another State

Yes, except if prohibited by the other State law.

Yes, except if prohibited by the other State law.

Yes, except if prohibited by the other State law.

Yes, except if prohibited by the other State law.

Right to Merge with a LLC from Delaware

Yes

Yes

Yes

Yes

Right to Merge with an LLC from another State

Yes, except if prohibited by the other State law.

Yes, except if prohibited by the other State law.

Yes, except if prohibited by the other State law.

Yes, except if prohibited by the other State law.

Right to Convert Into a C Corporation

N/A

Yes

Yes

Yes

Right to Convert Into a Close Corporation

Yes, subject to restrictions proper to close corporations

N/A

Yes, subject to restrictions proper to close corporations

Yes, subject to restrictions proper to close corporations

Right to Convert Into a S Corporation

Yes, subject to restrictions proper to S corporations

Yes, subject to restrictions proper to S corporations

N/A

Yes, subject to restrictions proper to S corporations

Right to Convert Into an LLC

Yes

Yes

Yes

N/A

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