As for the different levels of responsibility that owners and partners can help in selecting the appropriate form of organization for future business initiatives. Limited Liability Corporations: Business Name Business Type Personal liability Tinker’s Home Security Service Sole proprietorship The sole proprietor’s assets, personal and business-related, are all subject to a lawsuit (Statuses, 2012). Tinker & Tailor’s Home Security Service General partnership All the partner’s assets (personal and business) are subject to a lawsuit (Statuses, 2012).
Tinker & Tailor’s Home Security Service Limited partnership Limit in proportion to their respective contributions. Tinker & Tailors Home Security Service, Inc. Corporation Liability is limited to one’s investment (i. E. , in shares of stock) (Statuses, 2012). Tinker & Tailor’s Home Security Service, LLC Limited Liability Company Limited to the extent of amount in limited liability clause of the company’s memorandum. Limited Liability Corporations and Partnerships Starting a new business requires many decisions and much planning.
One of the oldest and most important decisions is the way of the company, or the type f business entity. The common forms of business entities are sole proprietorships, partnerships, limited liability company (LLC) Limited Liability Partnership (ALP) of public and private capital, and franchises. This document describes the functions of the company limited by shares and companies, and the reasons for choosing one over the other in the creation of a new company. The limited liability company A limited liability company is a type of business entity in which the company is separate from its owners.
Often the limited liability company is a sole repositories, becoming owner of the LLC provides personal liability protection, while still allowing profits and losses of the business pass directly to the owners without the LLC to be taxed separately. “There can be an unlimited number of shareholders of an LLC. The company can be run by its members or the members may appoint a manager,” (Drummer, 2008, p. 1). In addition, the LLC will appoint a registered agent, who is responsible for receiving legal documents for the LLC.
Often, the registered agent is the employer or manager, if designated in the state that determines LLC, (Drummer, 2008). LLC is easier and cheaper for companies to establish full, and do not require annual meetings of shareholders. LLC to protect their owners in a similar way as a society, but requires less paperwork. Unlike a traditional society, the LLC has no shareholders, decision-making meetings of shareholders, or statute. A limited liability company, combines the tax advantages and management flexibility of a partnership with the liability of a company” (LLC. Com, 2008).
LLC are other benefits, such as limited liability, taxation of the transfer, and management flexibility. The owner or owners of an LLC are responsible for the debts of the limited business, like the shareholders of a company. This allows each owner to protect personal assets from claims and lawsuits against the company. This limits the liability of each owner the amount that he or she has invested in the business. The LLC also has the option to choose your own tax situation. In addition, the ruling does not affect the personal finances of the owner as a sole proprietorship.
Limited Liability Partnerships A limited liability company protects each partner from personal liability for certain obligations of the company. An important difference from other partnerships is that each partner is liable for the debts and obligations of the partners. With limited liability Company, each state has its own laws governing partners for these vessels. Some states allow only certain professions, such as lawyers and accountants to form ALP. Some states only provide protection from liability for negligence claims, leaving personally responsible for other types of requests partner.
For tax purposes, profits are divided equally between the partners and the partnership is not taxed separately. Without a partnership agreement, loss of income and profits are split between partners that wish. The partners then report individual amounts divided in their tax returns, pay taxes accordingly. Gains and losses are passed directly to shareholders, with each ALP partner personally liable only for its own negligence or the negligence of an employee who is under the direct supervision of the partners. The other partner is not liable for the negligence of someone else in society, (Stigma, 2006).
Making a Choice The circumstances play an important role in choosing which companies the institutions using. When establishing a new business, the property determines the choice. LLC formation often depends on what state contains the business. Some states have experienced legal and tax advantages, providing benefits for a small business. Starting a new business in Delaware or Nevada LLC are forming a logical choice, (Llc. Com, 2008). Often, LLC only licensed to do business in the state in which they are formed. The researcher must answer the question from a personal point of view, such as starting a business is a real concept.
At this time, he circumstances justifying the selection of a limited liability company. Another person involved in the business. Preliminary research shows that ALP are not limited to certain professions in the state of Maryland. Since each partner has an equal share in the property or business, profits will be divided equally between the partners. In Maryland, taxes are high, and is not suitable for small businesses. ALP are taxed separately, providing some relief to an increase in the tax burden. Choosing an LLC is a good choice for the sole proprietor of a business.
If this researcher began his business without a partner, an LLC might be a good option. A real consideration for small businesses in the state of Maryland is failure. An LLC protect the personal finances of the owners. The LLC also offers some protection against the prosecution and debt problems, which are the possible real problems of today’s society.