FIN419 Limited Liability Corporation and Partnership

FIN419 Limited Liability Corporation and Partnership -...

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Limited Liability Corporation and Limited Liability Partnership 1 Limited Liability Corporation and Partnership FIN/419 Limited Liability Corporation and Partnership Every new business starts with a basic idea. Starting a new business requires effective decision-making and planning. One must first develop a business plan and decide on which
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Limited Liability Corporation and Limited Liability Partnership 2 business organization would best suit the company; these business entities include sole proprietorships, corporations, franchises, general partnerships, limited partnerships, limited liability corporations, and limited liability partnerships. This would require conducting research on licensing, state and federal laws, and regulations as well as the benefits of each business organization. Within this document limited liability corporations and partnerships are defined through discussing the roles, advantages, and disadvantages of each entity. There will also be a brief description of a hypothetical event planning business and the selection of corporate governance that best suits this type of business. Limited Liability Corporation (LLC) Limited Liability Corporations are a fairly new form of business organization. The structure of this business entity is very similar to that of a corporation but is a business structure allowed by state statute that combines some aspects of a partnership with those of a corporation. According to the IRS (2011) because most states do not have any restrictions on ownership, members may include corporations, foreign entities, individuals, and other LLCs; there is no limit to the number of members and most states do permit single member LLCs. An additional feature of an LLC is that management as well as owners is provided with flexibility and the benefit of pass through taxation. Advantages An advantage of establishing a limited liability corporation is that the company is taxed as a partnership instead of a corporation unless it elects to be taxed as a corporation (Cheeseman, 2010). LLCs are not taxed as an entity, this means that profits and losses pass through each member’s personal income tax return and the LLC files Form 1065 (U.S. Return of Partnership
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This note was uploaded on 08/22/2011 for the course BUS 415 taught by Professor Barnes during the Spring '11 term at Coastal Carolina University.

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FIN419 Limited Liability Corporation and Partnership -...

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