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Shrine Treasurers Association

Shrine Treasurers Association. What are the Various Business Structures?. Sole Proprietorship Partnership Corporation Limited Liability Partnership (LLP) Limited Liability Corporation (LLC). What is a Sole Proprietorship?.

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Shrine Treasurers Association

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  1. Shrine TreasurersAssociation
  2. What are the VariousBusiness Structures? Sole Proprietorship Partnership Corporation Limited Liability Partnership (LLP) Limited Liability Corporation (LLC)
  3. What is a Sole Proprietorship? A sole proprietorship is a type of business entity that is owned and operated by one individual and in which there is no legal distinction between the owner and the business
  4. What is a Partnership? A partnership is a business formed between two or more people who share in the profits and the liabilities
  5. What is a Corporation? An association of individuals, created by law or under authority of law, having a continuous existence independent of the existences of its members, and powers and liabilities distinct from those of its members
  6. What is a Limited Liability Partnership? A limited liability partnership is a partnership of one or more general partners, who manage the business, and one or more limited partners, who invest in the partnership but do not manage it
  7. What is a Limited Liability Corporation? A limited liability company is a type of business entity that combines the personal liability protection of a corporation with the tax benefits and simplicity of a partnership
  8. Pros & Cons Sole Proprietorship Partnership Corporation Limited Liability Partnership (LLP) Limited Liability Corporation (LLC)
  9. Sole Proprietorship Advantages: You have complete control of the decision making of the business Sale or transfer can only take place at your consent No corporate tax payments Minimal legal costs to form a sole proprietorship Few formal business requirements
  10. Sole Proprietorship Disadvantages: Personally liable for the business Can not simply declare that the business was bankrupt and cut losses
  11. Partnership Advantages: Two heads (or more) are better than one Easy to establish and start-up costs are low Greater borrowing capacity Opportunity for income splitting Partners’ business affairs are private Limited external regulation Easy to change your legal structure later if circumstances change.
  12. Partnership Disadvantages: Liability for the debts is unlimited Partners are ‘jointly and severally’ liable for the partnership’s debts Risk of disagreements and friction among partners Each partner is liable for actions by other partners If partners join or leave, can be costly to value partnership assets for buy in or buy out
  13. Corporation Advantages: Liability of the owners is limited to their investment in the company. Only the owners' contribution is at stake rather than their personal assets The corporation is considered a legal person with perpetual existence. It exists until it is liquidated Death or change in ownership has no effect on the corporation The ownership is represented by the number of share certificates held by a person, and this makes the transfer of ownership very easy
  14. Corporation Disadvantages: Establishing a corporation is a complex process Shareholders delegate the governance function to a body of persons called board of directors. The board of directors hires management to look after the day to day affairs of the corporation. It is quite possible that the management may act to further their own interests rather than the interest of the owners of the corporation In case of corporations there is double taxation. First of all the corporate income is taxed at a flat rate and then the dividends paid to the shareholders is taxed
  15. Limited Liability Partnership(LLP) Advantages: Limited partnerships allow pass-through taxation Losses limited to the money invested for limited partners making it easier to raise money Partners have limited liability, from errors, omissions, negligence, or malpractice committed by other partners By allowing limited partners to be responsible only for the capital invested in the partnership (and thus limiting personal liability), limited partnerships offer significant advantages as an investment vehicle.
  16. Limited Liability Partnership(LLP) Disadvantages: However, limited partners do not have the same amount of control over a partnership as a general partner.
  17. Limited Liability Corporation(LLC) Advantages: Like a corporation, an "LLC", is a separate and distinct legal entity LLC can obtain a tax identification number, open a bank account and do business, all under its own name Owners, known as members, have "limited liability", meaning that, under most circumstances, they are not personally liable for the debts and liabilities of the LLC For U.S. federal income tax purposes, an LLC is treated by default as a pass-through entity
  18. Limited Liability Corporation(LLC) Disadvantages: The principals of LLCs use many different titles—e.g., member, manager, managing member, managing director, chief executive officer, president, and partner. As such, it can be difficult to determine who actually has the authority to enter into a contract on the LLC's behalf Many individuals and Judges do not understand and may find ways to “pierce the veil” to find personal liability
  19. What is a Answer? Control vs Liability
  20. Thank You for Opportunity to be with You ! Questions?
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