FIN 419 Week 1 Individual Assignment - Limited Liability Corporation and Partnership Paper

Apr 24th, 2015
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FIN 419 Week 1 Individual Assignment - Limited Liability Corporation and Partnership Paper

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Week 1 - Limited Liability Corporation and Partnership PaperWeek 1 - Limited Liability Corporation and Partnership PaperWhen starting a business there are several types of organizations to choose from. Among the several choices are partnership and limited liability corporation. A partnership includes at least two people and each person has limited liability; and a corporation that each person has limited liability but the corporation has full liability. Herein, the roles of limited liability corporations and partnerships will be explained. In addition, it will be established under what circumstances limited liability corporation or partnership is chosen over the other. Limited Liability CorporationA limited liability corporation is defined as "?similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation" (Internal Revenue Service, 2010, para. 1). LLC members are not limited as to the number of corporations they may take part; however, they are limited as to the percentage of interest in other corporations. (Gitman, 2006).There are some advantages to LLC. About.com (n.d.) notes, "Members cannot be held personally liable for debts unless they have signed a personal guarantee" (Small Business Information, para. 3) and members are taxed individually thereby avoiding double taxation; however there are i

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