Limited Liability Corporation and Partnership Paper
University of Phoenix
November 26, 2012
Every business has a basic idea of the entity in which to establish. Capitalization and protection is the main focus to establish the business with a question of which type of entity should a business use to move forward. Businesses have a host of factors when making this decision, the most common forms of these entities are, partnership, corporation, sole proprietorship, and S corporation. A Limited Liability Company (LLC) is a business structure allowed by the different state statutes. The following will list two of these entities and the business entity which I ...view middle of the document...
A partnership is "an association of two or more persons to carry on as Co-owners of a business for profit." The essential characteristics of this business form, then, are the collaboration of two or more owners, the conduct of business for profit (a nonprofit cannot be designated as a partnership), and the sharing of profits, losses, and assets by the joint owners. A partnership is not a corporate or separate entity; rather it is viewed as an extension of its owners for legal and tax purposes, although a partnership may own property as a legal entity (Partnership, 2012).
Collaboration is a role, which in a partnership allows the partners to understand what resources and expertise the other partner is good at. Whereas, one person who owns a company has the sole responsibility, a partnership allows the owners to work together to obtain the goals that the company has set. Having a partnership can allow each partner time to share with family, friends, and leisure activities that they may not have being a sole-proprietary.
Tax advantages come along with having a partner. Each individual receives profits from the company, which this is a personal taxable income. Unlike the corporation tax laws, while in a partnership the monies are taxed only on a personal level and not on the corporation level.
The method in which I would form is a limited liability corporation (LLC), this entity would be the best method if one did not have stakeholders or investors involved in the business. When forming a limited liability corporation, it allows the business owner to be free of any creditors that stems from owning the business. The limited liability corporation would allow the business operate and function differently from the corporate businesses. For instance, if...