Advantages And Disadvantages Of Limited Partnerships
Description In a limited partnership as least one partner is limited and the other is a general partner. The limited partner is not involved in the day to day activities and has no voice in management. Legally they are not liable for all the financial obligations of the business.
Two Advantages 1. General Partners receive most of the profits; the limited partners invest money into the company and only get a certain amount of the profit.
2. Having a limited partner helps the business financially while the general partner still has complete control of the business.
Two Disadvantages 1. Limited partners are limited. They are not allowed to have any voice in the business or manage any of the business.
2. If the general …show more content…
The limited partner is not responsible for managing the business and has no control over the business.
Profit retention The limited partner usually gets a specified share of the profits while the general partner gets the rest of the profit.
Description C corporations are “for profit” corporations, named after subsection C of the Internal Revenue Code. They are separated from their owners. The owners are now shareholders in the company.
Two Advantages 1. One advantage is that owner-employees of C corporations can buy tax-deductible fringe benefits for themselves and they have the option to buy stock in the company.
2. Another advantage is corporations manage to pay little or no income tax. This possible when expenses exceed income or if times are bad.
Two Disadvantages 1. Double taxation on dividends- Net earnings, which is profit left after paying corporate taxes, must be reported as taxable income. Then the earnings are taxed again as personal income to the stockholder.
2. It is easy for stockholders to transfer shares of stock with others. It is also easy for stockholders associates to transfer stocks with could be a disadvantage for