Posts made in May, 2017

The Partnership and Limited Liability Company (LLC) Business Structures

Posted by on May 30, 2017 in Business Litigation | 0 comments

Partnership and Limited Liability Company (LLC) are two types of business structures those thinking of putting up their own firm can choose from. Partnership is owned by a group of individuals. Under this business structure, owners may choose either the General Partnership or the Limited Partnership. In General Partnership, ownership, management, duties and all profits and losses are shared by all the members of the group that put up the business. In a Limited Partnership, however, one of the members, usually the major financier, gains the right to manage the business; since all other partners shared only in the capital needed to start the firm, their right in running the business and their share in the profits and losses of the firm are, therefore, not equal with the major financier.

A partnership may be entered into informally, requiring only the shareholders’ common understanding and mutual consents: the only legal requirement needed is the business’ name for purpose of registration. This type of business can also be easily terminated upon the completion of a project, the resignation or death of any of the partners or when the partners make a decision to end it. But as the partners share in whatever profit is earned, they also share the debts incurred by their firm.

Filing of a certificate of partnership is usually done at the office of the Secretary of State. Though a contract of partnership among the partners is not really necessary, many legal experts advise this as this will save them from any possible litigation concerning the extent and limitation of their duties and rights.

For those intending to start a small business venture, however, the LLC format is more preferable. This is because an LLC combines the best features of a partnership and a corporation. Owners of LLCs (there may be just one owner or many owners can either manage the business or hire someone else to manage it for them. A couple of its main features are protection from personal accountability for business claims and debts (this means that, in cases, such as failure to pay company debts, the members’ personal possessions are safe from being claimed or confiscated by creditors, suppliers or by a landlord), and freedom from double taxation, since LLCs, which are referred to by the IRS as “pass-through entities,” pass the burden of tax payment to its members rather than to the business firm itself.

In a website found at www.rrs-law.com, it is said that, “Every business has unique needs, and different business models may be more appropriate for different types of company. Forming one and dealing with all the legal matters associated it can be stressful. Fortunately, with the guidance of a knowledgeable and experienced business attorney, you can rest assured that the decisions you make will set your company up for future success.”

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