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Management of an LLCThere are two options for management, generally set forth in the articles of organization:•Member-Managed: all of the members participate in management, like a partnership.•Manager-Managed: members are elected to manage the LLC. If the articles are silent, statutes provide either that each member has one vote or votes are made based on percentage of ownership.16
Corporation – Officers, directors and shareholders are not personally liable for debts/liabilities (absent fraud). Exists as a separate legal “person”
The Nature of the CorporationA corporation is a creature of statute, an artificial “person”The shares (stock) of a corporation are owned by at least one shareholder (stockholder). 18
Corporate TaxationCorporate profits can either be kept as retained earnings or passed on to the shareholders as dividends.Corporate profits are taxed under federal and state law as a separate “person” from its shareholders.Regular “C” corporations are taxed twice: at the corporate level and at the shareholder level.19
Piercing the Corporate Veil“Piercing the Corporate Veil” occurs when a court, in the interest of justice or fairness, holds shareholders personally liable for corporate acts.Court concludes that shareholders used corporation as a “shield” from illegal activity. 20
Sole ProprietorshipGeneral PartnershipLimited PartnershipLLPLLCCorp.Ease of Creation?Very easyEasyDifficultDifficultDifficultDifficultPersonal Liability for Owners?YesYesYes for General Partner. No for limited PartnerNo (except for misconduct or tort)NoNoSeparate Taxable Entity?