Legal HW- 3:16-3:22.docx - Answer the following questions...

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Answer the following questions with short essays. Then answer the multiple-choice questions at the end of chapters 20 and 21 and explain your answers to each multiple-choice question. 1. Explain the origins of, and differences between, LLC’s, general corporations, and partnerships. What are their advantages and disadvantages? The structures of businesses can easily be confused and have various similarities and differences, which can be difficult to keep straight. Corporations are perhaps the easiest to identify, as they are not as similar as LLC’s and partnerships. Corporations are well established, as the structure dates back to the ancient Greeks. They also include a variety of advantages, such as limited liability, transferability of interest, and duration. This means that unlike sole proprietorship, stockholders cannot be held personally liable for the debts of a corporation. Stockholders can also easily transfer their stock by selling it and do not need to obtain permission from other stockholders. Corporations are also established and can remain open despite circumstances regarding ownership and other individuals, such as death. The disadvantages of corporations are the logistics, as the establishment of a corporation is costly and requires a lot of time. Corporations are also subject to income tax and face a double taxation, as both the corporation and stockholder are taxed. LLC’s provide a great opportunity for entrepreneurs and other small businesses, as they provide limited liability, flow through tax structure, and freedom and flexibility. LLC’s are very easy to form and are acknowledged by the court of law. However, legislation is not well-developed regarding LLC’s and cannot be predictable, which is a big disadvantage to this business structure. LLC’s are encouraged to draft an operating agreement to refer to, however due to the freedom associated with an LLC, that cannot be enforced. An LLC can go public; however, it results in more disadvantages than advantages, so it is better to reorganize as a corporation. Partnerships are similar to LLC’s in a variety of ways, but differences are still prevalent. Partnerships enjoy the flow through tax structure, similar to LLC’s. Partnerships are also easy to form, as there can be no paperwork involved in some cases. Partners also get a great amount of authority, as

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