Limited Partnership Case Study

Register to read the introduction… • LOCATION – If all parties in the partnership are in agreement, they can informally move their business to another state while following their new states laws and regulations. • CONVENIENCE/BURDEN – One convenience of general partnership is the low volume of paperwork required for registration and is fairly cheap. While like sole proprietorship, it is difficult to get money for start up costs. LIMITED PARTNERSHIP: Limited partnerships have many similarities as general partnership, but with several differences. There are two or more partners but differ in liability and taxation of income. • LIABILITY – When founding a limited partnership, at least one of the partners will have full liability while the other partners(s) have limited liability. His or her liability is limited to the amount of his or her investment. • INCOME TAXES – Limited partners are not subjected to income tax. However, the limited partner must follow specific guidelines so he or she does not become subjected to taxation like that of a corporation. • LONGEVITY/CONTINUITY – The limited partner is dismissed if one of the general partners leaves, dies or is declared legally incompetent. • CONTROL – Limited partners are not allowed to make any decisions concerning the operation of the business in which they have invested …show more content…
• INCOME TAXES – LLCs can choose weather to have the corporation taxed, or to let it “flow through” and have the members/shareholders pay personal income taxes. • LONGEVITY - In the event that the majority stockholder wants to leave or even dies, most states will allow the remaining LLC members to vote on whether they wish to continue will the LLC. • CONTROL – There are two types of LLCs: Member-Managed LLCs are controlled by the members of the company and Manager-Managed LLCs which are controlled by a hired manager. • PROFIT RETENTION – Profits are divided up based on the stake of the shareholder, much like S and C corporations. • LOCATION – Each state has different rules for governing LLCs. Some states have put restrictions and even special requirements for LLCs to exist in their respective state. • CONVENIENCE - LLCs have much more flexibility when distributing profits. • BURDEN - Tax classification is not always that simple as it federally may be classified as a sole proprietorship, partnership, or a