entity differences

entity differences - Revised January 26, 2008 Comparison of...

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Revised January 26, 2008 Comparison of Business Entity Types Sole Proprietorship General Partnership Limited Partnership LLP LLC C Corp S Corp Restrictions on Nature or Number of Owners One owner. Two or more general partners as owners. No maximum, but requires at least two owners (can be a mix of at least one general partner and one or more limited partners). General partners are generally liable for partnership debts; limited partners are generally protected from liability. Two or more general partners as owners. Under most state laws, partners must be licensed to practice a “profession.” No restrictions on nature or number of shareholders. No restrictions on nature or number of shareholders. Only individuals who are U.S. citizens or resident aliens and certain trusts and estates may be shareholders; total number of shareholders may not exceed 75. Simplicity in Operation and Formation Simplest business entity type to establish and operate. Relatively simple and informal business entity type. Partnership Agreement can be oral or written (although a written agreement is usually recommended). A limited partnership must have a written Limited Partnership Agreement. Provisions may be as simple or as complex as the situation requires. Relatively simple and informal, except generally LLP must file a statement with the state setting forth the LLP’s qualification under the state LLP statute. LLP statutes vary considerably from state to state. Generally have an LLP Agreement among the partners. Generally similar to a limited partnership, but required to file a simple certificate of formation in most states. Members should have a LLC Agreement (a/k/a LLC Operating Agreement) (note under some LLC statutes, agreement may be oral). Provisions may be as simple or as complex as the situation requires. Requires most formality in establishment and operation. Requires formality in establishment and operation and close oversight by a tax adviser . entity differences.doc
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Sole Proprietorship General Partnership Limited Partnership LLP LLC C Corp S Corp How to Form Begin operating business. Complete Assumed Name Certificate or Business Certificate. Oral or written Partnership Agreement setting forth basic issues such as: (1) how much each partner will contribute; (2) what value will be placed on contributions; (3) how profits and losses will be divided; (4) when and how profits will be withdrawn; (5) whether and how partners compensated for services to partnership; and (6) how changes in ownership of interests in partnership will be handled. Written Limited Partnership Agreement setting forth basic issues such as: (1) how much each partner will contribute; (2) what value will be placed on contributions; (3) how profits and losses will be divided; (4) when and how profits will be withdrawn; (5) whether and how partners compensated for services to partnership; and (6) how changes in ownership of interests in partnership will be handled. Follow rules set
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This note was uploaded on 11/25/2011 for the course BUS 140 taught by Professor Allisonburdette during the Fall '11 term at Emory.

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entity differences - Revised January 26, 2008 Comparison of...

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