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BUS 311 Requirements of an LLC, partnership and corporation

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Accounting

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Title: Requirements of an LLC, partnership and corporation
BUS311: Business Law I (BAI1331A)

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LLC:
“You can form an LLC by filing the required paperwork with your state either by mail or online,
depending on the requirements of your state. The basic LLC formation document in most states
is called "Articles of Organization or in some states a "Certificate of Organization."”
(http://biztaxlaw.about.com)
“An LLC is formed by submitting articles of organization with the Secretary of State of a state.
There is a fee usually associated with the formation of the LLC, the size of which varies
depending on the state.
After the parties submit the articles of organization, the owners of the LLC (called ``members")
usually enter into a written agreement about how the LLC will be run, who is in charge of
running it, how profits will be divided up, etc. This agreement is called the operating agreement
and it is similar to a limited partnership agreement. If there is no operating agreement, then the
``default" rules for running an LLC kick in. These default rules are found in the LLC statutes of
the state where the articles of incorporation are filed. Generally speaking, it is better to have an
operating agreement than it is to rely on the default rules, if only because it forces the members

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to think about many practical aspects of running a business at the outset and then agree about
such matters before real money is at stake.
The people who actually run the LLC for the members are usually called the managers. The
managers can be, but do not have to be, members of the LLC. The managers can be set up to
resemble a board of directors if that is what the members want.” (http://www.tannedfeet.com)
Partnership:
“A partnership is the relationship existing between two or more persons who join to carry on a
trade or business. Each person contributes money, property, labor or skill, and expects to share in
the profits and losses of the business.
A partnership must file an annual information return to report the income, deductions, gains,
losses, etc., from its operations, but it does not pay income tax. Instead, it "passes through" any
profits or losses to its partners. Each partner includes his or her share of the partnership's income
or loss on his or her tax return.
Partners are not employees and should not be issued a Form W-2. The partnership must furnish
copies of Schedule K-1 (Form 1065) to the partners by the date Form 1065 is required to be
filed, including extensions.” (http://www.irs.gov)
“You’ll also need to establish your business name. For partnerships, your legal name is the name
given in your partnership agreement or the last names of the partners. If you choose to operate
under a name different than the officially registered name, you will most likely have to file a

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Very useful material for studying!

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