Limited Liability Company and Partnership

Topics: Corporation, Limited liability company, Limited liability partnership Pages: 3 (734 words) Published: November 14, 2011
Limited Liability Company and Partnership

Jasamine L. Stephens

Finance for Decision Making FIN/419

October 10, 2011

Maria Johnson 

Limited Liability Company and Partnership

Every business venture begins with a dream and a basic idea. Beginning a business is a decision that must be made by first deciding what type of entity to establish. There are several factors that need to be decided such as will the new business have one or multiple owners. The most common forms of a business entity are sole proprietorship, partnership, corporation, S corporation, limited liability company (LLC), and limited liability partnership (LLP). When creating a business with one owner the most logical form would be a limited liability company. This paper will discuss the benefit of using the limited liability company and limited liability partnership.

”Permitted in most states, the limited liability company gives its owners, like those of an S corps, limited liability, and taxation as a partnership. Unlike a S corp, the limited liability company can own more than 80% of another corporation, and corporations, partnerships, or non-U.S. residents can own limited liability shares” (Gitman, 2009). Limited liability companies are popular because, like a corporation, owners have a limited personal liability for the debts and actions of the company. This is a business that is allowed by state statutes. The beauty of a limited liability corporation is the ability to structure the company like a corporation, but with the tax advantages of a partnership. The owner of a limited liability company is called a member. There can be a single member, corporation, or other limited liability company listed as a member in a limited liability company. Every state requires companies to file “Articles of Organization,” or a “Certificate of Formation” to formally form a limited liability company under a state statute. According to the Internal Revenue Service (IRS) the...

References: Gitman, L. J. (2009). Principles of managerial finance (12th ed.). Boston, MA: Pearson Addison Wesley.
Internal Revenue Service. (2011). Retrieved from http://www.IRS.GOV
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