Limited Partnership: Sole Proprietorship And General Partnership

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Register to read the introduction… While the limited partner is paid as a return on his investment, this income is taxed as personal and he is excluded from being able to write off business expenses to offset that income since he does not operate the business. General Partners may do so.

• LONGEVITY/CONTINUITY – The limited partnership will continue as a business even if one of the limited partners dies or transfers his equity. However, should one of the general partners die, a new partnership agreement will have to be drawn up.

• CONTROL – In a limited partnership, the limited partner has no say in day to day operations of the business, or in any business decisions. Only the general partners of the business have control over its operations and decisions.

• PROFIT RETENTION – The limited partner is paid as a return on his investment from the profits of the business as agreed by a contract. General Partners split the remaining profits based on their share of the
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There are times however that litigation can “pierce the corporate veil” and go after the owner’s and shareholders personal assets due to certain legal circumstances determined by a judge in court.

• INCOME TAXES – In the C Corporation the owners and the Corporation are taxed separately. Even though the Corporation is taxed already, it will distribute its income in the form of dividends to owners and shareholders and each will pay tax on that income a second time. The C Corporation will also have to pay federal taxes and state taxes dependent on which state the income was sourced and what its tax rates are.

• LONGEVITY/CONTINUITY – A C Corporation continues as an entity until legally dissolved or expired as directed by contract. This is regardless of loss of owners or shareholders.

• CONTROL – In a C Corporation decisions are made by a Board of Directors. The Board is made up of members who are elected by shareholders. The board then appoints officers who are in charge of various operations of the

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