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Connecticut Corporations, LLCs and Partnerships

What is the Difference between Corporations, Partnerships and LLCs?

Below is an overview of the basics of the most common business entities used in structuring a business, from corporations to partnerships.

Sole Proprietorship

The simplest and most common form of operating businesses. To create a sole proprietorship an individual needs to merely begin to do business. It may be necessary to have a business license, a sales tax permit, or to register the business name.


If seeking to go into business with another, you may consider a partnership. A partnership can be created formally, (with a written agreement) or informally.  A written agreement identifying the primary terms of the relationship may help avoid the costs of litigation later. You will need to properly register the business name.

“C” Corporation

The “ordinary” corporation is referred to as a “C” corporation. A primary advantage of incorporation is that owners in the company are only liable for corporate debts and obligations to the extent of their investment in the company.

“S” Corporation

An “S” corporation is essentially a “C” corporation which has met certain specific requirements and is therefore entitled to the liability limitations of a C corporation, but is taxed like a partnership. The primary disadvantage of an S corporation is that it has a higher cost of maintenance than other business forms.

Limited Liability Company

A limited liability company generally is a simpler form of business than a corporation but it retains the limitation of liability of a corporation, while having the option of being taxed like a partnership.

Other Considerations

Regardless of the particular form of business you choose, there are a number of other key considerations. Even if your business entity choice features limited liability for company indebtedness, you should review all possible exposure to yourself and your company and make sure that insurance of the appropriate type and amount is obtained.

We have relationships with the other professionals you may need in the formation of your business, including business insurance, accounting and financial planning.

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