Business Structures Summary

http://cpajournal.blogspot.com/

Business structures summary Sole proprietor Initials Initials in the name Qualities / Nature Separate legal entity • Sue / sued Liability

No No

General partnership (GP) No Yes

UL

UL(all partners)

L(LP) + UL (GP) GP- Mgt.,UL

Example

-

-

B.E. Partners, L.P.

Composition

One individual / Owner

One or more • Individuals • Firms • Corporations • Any artificial juridical person • RUPA

1 GPr 1 LPr GPr- Any artificial juridical person. Partnership interest written in books

Formed under Legal Formalities

Licensing, zoning laws etc not as complicated as

Limited partnership LP Yes GP+ Corporation Yes

• State statute • RULPA Compliance of all filing requirements

1

Limited liability partnership LLP Yes GP + LP Yes

Limited liability Corporation

L (all partners) UL(only for the partner who did malpractice) Professional firms

L

LLC Yes GP+ Corporation Yes

•

State jurisdiction

http://cpajournal.blogspot.com/

Filing

others Not required with state

With Secretary of State

Paying fees Filing documents

Pay organizational. fees Fictitious name statement

Other documents

Agreement

Nil

Capital

Personal resources

Optional

Certificate of LP • Not filed-treated as GP • Signed by all partners • On the date or later date specified in the certificate Certificate of amendment < 30 days • Admission • Withdrawal • Contin. on o death , o withdrawal, o incapacity, o Transfer of interest. Certificate of Cancellation • After dissolu. • Beginning of w.up • When no LPr's LP agreement (Optional)

2

With Secretary of State Pay formation fees Articles

With Secretary of State Pay formation fees Articles

Members operating agreement Cannot issue

http://cpajournal.blogspot.com/

usiness in other state File Register Qualified? Management

Profits and losses

Personal borrowing power E.g.: Bank Loans Yes No other legal formalities Self Managed

All partners

Same as GP

Sole proprietor

Tax Structure Benefits Deductions/lossess

Enjoys benefits and deductions

Taxation filing documents Double Taxation Business expansion

Proprietors Tax return No Debt finance

Rights

stock

Same as GP • •

Flow through Method Partners file personal income tax returns

LP files Information return No

No

Equal Mgt particip.

Equal Mgt particip

3

•

Flow through Method • Partners file personal income tax returns As GP or LP No • Debt finance • New Partners Equal Mgt particip

Member managed/ Manager managed Same as GP As per agreement or equal • Flow through Method • Members file personal income tax returns

No • Debt finance • New coOwners Equal Mgt particip

http://cpajournal.blogspot.com/

Duties Report to Powers

None • • •

Termination/ Dissoultion

1. Death 2. Assigning of interest

Duration

Discretion of Sole proprietor No

Perpetual Existence Liabilities (Order of distribution)

•

Use GP name Voting on all matters Owning and managing GP assets

Use LLP name • Voting on all matters • Owning and managing LLP assets Same as GP

1. As per agreement 2. If voted continues • On Death • Withdrawal • Bankrupty Of members

• • • •

4

Creditors Members unpaid distributions Members capital contributions Remaining to

http://cpajournal.blogspot.com/

members according to agreement Miscellaneous Advantages : • • • •

Cost Formalities Flexibility Control

Disadvantages : • • •

Risk Finance sources Business expansion

• • • • • • • • •

Easy, cheap Less legal formalities Act quickly complete control Min. cap. req. Risk Unlimited Depending on debt finance Additional debt Lack of expertise/experi ence

LP agreement • Rights/duties of GPr's and LPr's • Terms and condi. of operations,diss.,termina tion Certificate of LP Name of LP Address of LP Name & Address of agent Name & Add. of all GPr''s Name add of LPr's not req. Latest Date of dissolution Any other matters

5

Limited liability • Contracts • Torts But not for others mal practice

Limited liability • Contracts • Torts (Not like share holders of a corp.)