Compare business structures
To find the business structure that works best for you, you may want to use the tables below to compare:
To compare this information in a single table, see Washington business and organization structure considerations.
This information is for reference only. For detailed considerations, please contact your trusted advisor.
| Filing requirements |
| Business structure |
Required to file or register with the Washington Secretary of State? |
| Sole proprietor |
No |
| General partnership |
No |
| Limited Liability Company (LLC) |
Yes |
| Corporation |
Yes |
| Limited Partnership (LP) |
Yes |
| Limited Liability Partnership (LLP) |
Yes |
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| Difficulty of forming a business |
| Business structure |
Formation difficulty |
| Sole proprietor |
Low |
| General partnership |
Low |
| Limited Liability Company (LLC) |
Medium |
| Corporation |
Medium/high |
| Limited Partnership (LP) |
Low |
| Limited Liability Partnership (LLP) |
Medium |
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| Who has liability |
| Business structure |
Liability |
| Sole proprietor |
Sole proprietor has unlimited liability. |
| General partnership |
Partners have unlimited liability. |
| Limited Liability Company (LLC) |
Members aren’t typically liable for the debts of the LLC. |
| Corporation |
Shareholders aren’t typically responsible for the debts of the corporation. |
| Limited Partnership (LP) |
At least one general partner has unlimited liability. |
| Limited Liability Partnership (LLP) |
Partners aren’t typically liable for the debt of the LLP. |
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| Legal and operational requirements |
| Business structure |
Requirements |
| Sole proprietor |
Relatively few legal requirements. |
| General partnership |
Relatively few legal requirements. |
| Limited Liability Company (LLC) |
Some formal requirements, but less formal than corporations. |
| Corporation |
Board of directors, annual meetings, and annual reporting are required. |
| Limited Partnership (LP) |
Some formal requirements, but less formal than corporations. |
| Limited Liability Partnership (LLP) |
Some formal requirements, but less formal than corporations. |
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| Who manages the business |
| Business structure |
Management |
| Sole proprietor |
Sole proprietor has full control of management and operations. |
| General partnership |
Typically each partner has an equal voice unless otherwise arranged. |
| Limited Liability Company (LLC) |
Members have an operating agreement that outlines management. |
| Corporation |
Managed by the directors, who are elected by the shareholders. |
| Limited Partnership (LP) |
Limited partners are excluded from management unless they serve on the board of directors. |
| Limited Liability Partnership (LLP) |
All partners have the right to manage the business directly. |
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| How federal taxes are determined |
| Business structure |
Federal taxes |
| Sole proprietor |
Not a taxable entity. The sole proprietor pays all taxes. |
| General partnership |
Not a taxable entity. Each partner pays taxes on his or her share of income, and can deduct losses against other sources of income. |
| Limited Liability Company (LLC) |
Depending on structure, there is no tax at the entity level. Income/loss is passed through to members. |
| Corporation |
Taxed at the entity level. If dividends are distributed to shareholders, dividends are also taxed at the individual level. |
| Limited Partnership (LP) |
Files taxes as a separate entity, must meet certain criteria to avoid being taxed as a corporation. |
| Limited Liability Partnership (LLP) |
Taxed as a separate entity. Must meet certain criteria to avoid being taxed as a corporation. |
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| Washington excise tax and liability (Washington Department of Revenue) |
| Business structure |
State taxes and liability |
| Sole proprietor |
Taxes based on business entity income. Sole proprietor has unlimited liability. |
| General partnership |
Taxes based on business entity income. General partners have unlimited liability. |
| Limited Liability Company (LLC) |
Taxes based on business entity income. Responsible parties may have liability for trust fund taxes. |
| Corporation |
Taxes based on business entity income. Responsible parties may have liability for trust fund taxes. |
| Limited Partnership (LP) |
Taxes based on business entity income. General partners have unlimited liability. Limited partners may have liability up to the amount of their investment. |
| Limited Liability Partnership (LLP) |
Taxes based on business entity income. General partners have unlimited liability. Limited partners may have liability up to the amount of their investment. |
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