Week 1 Business Law Assignment

Topics: Corporation, Limited liability company, Limited liability partnership Pages: 5 (1485 words) Published: July 1, 2012
Difference between S corporation and Partnership

The difference between a partnership and an S corporation concerns the issue of liability protection. Other differences between a partnership and an S corporation include formation requirements as well as ongoing formalities. A partnership may end or dissolve upon death or withdrawal of a partner. S corporations may continue to operate forever, long after the original owners of the company have withdrawn or past away. Name

Partnerships that choose to operate under a different business name from that of the partners' names must file a "doing business as" (DBA), or "fictitious" business name, as explained on the Citizen Media Law Project website. S corporations rarely file a fictitious formation documents. Many states require S corporations to include a corporate identifier business name. Rather, S corporations list the name of the business in the company's in the business name such as "incorporation," "corporation," or the correct abbreviation. The business name of a partnership may not contain a corporate identifier. Liability

Members of a partnership have unlimited liability for debts and obligations that arise in the business. Business creditors of a partnership may pursue the personal assets of a partner in an effort to recover business debts. Shareholders of an S corporation have limited liability for company debts and obligations. The personal assets of an S corporation shareholder may not be pursued by business creditors in reference to business debts and obligations of the company Formation

Difference between a partnership and an S corporation concerns the issue of formation. S corporations are required to file articles of incorporation with the state where the S corporation operates. Furthermore, S corporations must pay the applicable filing fee charged by the state. Filing fees vary from state to state. Business owners are not required to file paperwork with the state to form a partnership. Therefore, partnerships aren't subject to the same filing fees as those imposed on S corporation. Formalities

S corporations have more ongoing requirements when compared to partnerships. S corporations must hold corporate meetings, file annual reports and record corporate minutes. As explained on the Legal Zoom website, partnerships can operate without formal operating procedures. Partnerships aren't required to hold company meetings or file annual reports with the state. Raising Capital

A major difference between a partnership and an S corporation concerns the ability of an S corporation to issue stock to investors. Partnerships can't issue stock, making it harder to raise capital. S corporations may be more appealing to investors because shareholders can invest in the company without being held liable for debts of the S corporation; this isn't the case with a partnership.

Difference between LLC and Partnership

An LLC is a limited liability company, sometimes referred to as a limited liability corporation, and an LLP is a limited liability partnership. Both legal entities are relatively new in the business world, and both share aspects of a corporation and a partnership. However, there are differences between these two business types, some of which are particular to the state the company operates in. Legal Protection

LLCs and LLPs both provide personal asset protection from business debts and liabilities. However, in an LLC the members are not protected from the liability of another member, but an LLP does give this protection. For instance, if an LLC member in an engineering practice makes a client error that is legally actionable, the LLC and all of its members can be held liable. But if a partner in an LLP is legally liable for something, the other partners cannot be held jointly liable. Tax Implications

Both LLCs and LLPs can "pass through" earnings from the...
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