GSU BUSA 2106 - Business entity forms (5 pages)

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Business entity forms

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Business entity forms


LLC Taxation Corporation

Lecture number:
Lecture Note
Georgia State University
Busa 2106 - Legal Environment of Bus

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BUSA2106 Lecture 11 Outline of Last Lecture I Sole Proprietorships II General Partnerships III Limited Partnerships Outline of Current Lecture IV Limited Partnerships V Corporation VI Current Lecture Limited Partnership Taxes Same as general partnership Pass through taxation Taxed as personal income of the partners Limited Partnerships Pros and Cons Advantages Attractive to investors who don t want to participate Limited partners liable up to amount of capital contribution Flow through tax Disadvantages Requires certificate of LP General partners are personally liable Defective formation and or participation may expose limited partners to liability Limited Liability Company LLC Separate legal entity from the members themselves Hybrid business type that combines Management and control of a general partnership Pass through tax status of a partnership OR taxed as a separate entity like a corporation Greater liability protection like a corporation Formation File articles of organization with state Names of members Other requirements Operating agreement How LLC will be managed How profits will be divided How membership can be transferred How LLC will be dissolved Like partnership agreement Termination Similar to partnerships Dissociation Departing member s interest is usually purchased by remaining members at fair market value Dissolution and winding up Assets are collected liquidated and distributed After assets are distributed to creditors capital contributions are returned to members and remaining money is distributed to members Controlled by terms of LLC operating agreement Liability LLC is liable for any loss or injury caused to anyone as a result of a wrongful act or omission by a member manager agent or employee of the LLC who commits the wrongful act while acting within the ordinary course of business of the LLC or with authority of the LLC Member Liability Member liability is generally limited to capital contribution How is this similar to another form of

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