Fin 419 Week 1

Running head: LIMITED LIABILITY CORP. AND LIMITED LIABILITY

Limited Liability Corp. and Limited Liability Partnership

FIN/419

Limited Liability Corp. and Limited Liability Partnership

Starting up a company is a tough venture. Selecting which kind of company is important as well as a lot of alternatives are available. Among the many different alternatives are Limited Liability Partnership and Limited Liability Corporation. A partnership incorporates a minimum of two individuals as well as each individual has limited liability; and a corporation needs each individual has limited liability but the corporation has complete liability. Herein, the jobs of limited liability corporations as well as partnerships are described. Additionally, establishing the explanations why a limited liability corporation or partnership is selected over the other is discussed

Limited Liability Corporation

A limited liability corporation is described 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 aren't limited regarding the variety of corporations they may get involved; but, they are limited regarding the portion of interest in other corporations. (Gitman, 2006).

Usually there are some benefits of an 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 personally thus averting double taxation; but there are examples that the LLC is taxed like a corporation.

The drawbacks of an LLC, as stated by About.com (n.d.), is that a person might be double taxed, the volume of documentation can be less than a corporation yet more than a sole proprietorship, as well as...