Owners of closely held companies have more choices than ever when it comes to ownership structure for their business.

While there is plenty of information and advice out there on which type of entity is best, the truth is there's no one-size-fits-all formula for making this decision. Each company's circumstances are unique, and owners must carefully analyze the pros and cons of the primary forms of ownership to decide which one will be most beneficial to their company.

S corporation - The main benefit of S status is that it avoids the double taxation of C corps, since income and losses pass through directly to the owner-shareholders. However, there are some limitations on S corps, including the number of owners and classes of stock that may be issued, the deductibility of certain items (like company-paid health insurance premiums) and the potential tax impact of converting from C to S status.

"Just because there are tax benefits with an S corp doesn't always make it the best choice," says Jim Wheeler, a partner with Powell Goldstein in Atlanta. "Many companies need the certainty and structure of a traditional C corporation."

Limited Liability Company (LLC) - The LLC (or LLP as it applies to partnerships) is kind of a hybrid between sole proprietorships or partnerships and corporations. Like a corporation, it protects owners from personal liability for the business' debts and obligations. But profits and losses pass directly through to shareholders, thus avoiding potential double taxation.

"LLCs offer more flexibility and fewer limitations than S corps," says Schwarzmann. For example, they do not have a perpetual life like corporations do, they can have an unlimited number of owners (including non-U.S. residents), and they are allowed to own subsidiaries without restrictions.

However, LLCs aren't a cure-all, Wheeler warns: "Owners often have expectations that things will be cheaper or easier with an LLC, but sometimes it's the opposite. Lots of things tend to fall into place when you have a corporate structure. In many states, including Georgia, LLC law is underdeveloped, so you trade some certainty for flexibility when choosing the LLC."

Both Schwarzmann and Wheeler stress the importance of getting expert counsel when making the final decision about a form of business ownership.