15 Management of an LLC There are two options for management generally set

15 management of an llc there are two options for

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15
Management of an LLC There 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  Corporation A 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 Taxation Corporate 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 Proprietorshi p General Partnershi p Limited Partnershi p LLP LLC Corp. Ease of Creation? Very easy Easy Difficult Difficult Difficult Difficult Personal Liability for Owners? Yes Yes Yes for General Partner. No for limited Partner No (except for misconduct or tort) No No Separate Taxable Entity?

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