Limited Liability Corporation and Partnership Paper

Deciding location, the type of business, the finances to operate this equines, has become a bigger decision when It comes to wanting to develop an operating business. This paper will define Limited allowably corporations and partnerships, and explain roles of limited liability corporations and partnerships. This paper will then provide information based on my evaluation on what circumstances would I choose one instead of the other? When we think of limited liability, we think of companies that are not liable or that are not legally responsible for their actions.

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An article stated that, “A limited liability company (LLC) is a business structure allowed by state statute. LLC are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. Other features of LLC are more like a partnership, providing management flexibility and the benefit of pass-through taxation. ” (IRS, 2011) “Limited Partnerships are business organizations with one or more general partners, who manage the business and assume legal debts and obligations, and one or more Limited partners, who are liable only to the extent of their Investments.

Limited partners also enjoy rights to the partnership’s cash flow, but are not liable for company obligations. (Investor Words, 2011) Togo more in-depth of what a limited liability corporation and partnership is; “Limited liability partnership (ALP) or sometimes called a registered limited liability partnership (RALPH provides all of its owners with limited personal liability. Alps are particularly well-suited to professional groups, such as lawyers and accountants.

In fact, in some states Alps are only available to professionals. Professionals often prefer Alps to general partnerships, corporations, or LLC because they don’t want to be personally liable for another partner’s problems particularly those involving alphabetic claims. An ALP protects each partner from debts against the partnership arising from professional malpractice lawsuits against another partner. (A partner who loses a malpractice slut for his own mistakes, however, doesn’t escape allowably. Forming a corporation to protect personal assets may be too much trouble, and some Legal Encyclopedia) “A limited liability company, commonly called an “LLC,” is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. Like owners of partnerships r sole proprietorships, LLC owners report business profits or losses on their personal income tax returns; the LLC itself is not a separate taxable entity.

Like owners of a corporation, however, all LLC owners are protected from personal liability for business debts and claims a feature known as “limited liability. ” This means that if the business owes money or faces a lawsuit; only the assets of the business itself are at risk. Creditors usually can reach the personal assets of the LLC owners, such as a house or car. (Both LLC owners and corporate shareholders can lose this protection by acting illegally, unethically, or irresponsibly. (Nylon Legal Encyclopedia) An article stated that, “The main difference between an LLC and a partnership is that LLC owners are not personally liable for the company’s debts and liabilities. This means that creditors of the LLC usually cannot go after the owners’ personal assets to pay off LLC debts. Partners, on the other hand, do not receive this limited liability protection unless they are designated “limited” partners in their partnership agreement.

Also, owners of limited liability companies must file formal articles of organization with their state’s LLC filing office, pay a filing fee, and comply with retain other state filing requirements before they open for business. By contrast, people who form a partnership don’t need to file any formal paperwork or pay any special fees. LLC and partnerships are almost identical when it comes to taxation, however.

In both types of businesses, the owners report business income or losses on their personal tax returns; the business itself does not pay tax on this money. “(Nylon Legal Encyclopedia) Examining all of the data collected from this informative paper, I would use LLC to protect all of my property or personal assets when it comes to owning a business. This allows me to not be personally responsible for company debts unless I was unethical within owning this institution.