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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 Limited partnership LP Yes GP+ Corporation Yes Limited liability partnership LLP Yes GP + LP Yes Limited liability Corporation LLC Yes GP+ Corporation Yes

UL

UL(all partners)

L(LP) + UL (GP) GP- Mgt.,UL B.E. Partners, L.P. 1 GPr 1 LPr GPr- Any artificial juridical person. Partnership interest written in books • State statute • RULPA Compliance of all filing requirements

Example Composition

One individual / Owner

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

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

L

Formed under Legal Formalities Licensing, zoning laws etc not as complicated as

State jurisdiction

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Filing Paying fees Filing documents

others Not required with state Fictitious name statement

With Secretary of State Pay organizational. fees 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)

With Secretary of State Pay formation fees Articles

With Secretary of State Pay formation fees Articles

Other documents

Agreement Capital

Nil Personal resources

Optional

Members operating agreement Cannot issue

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usiness in other state File Register Qualified? Management

Personal borrowing power E.g.: Bank Loans Yes No other legal formalities Self Managed All partners Same as GP

stock

Profits and losses Tax Structure Benefits Deductions/lossess

Sole proprietor • • Flow through Method Partners file personal income tax returns

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

Enjoys benefits and deductions

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

Taxation filing documents Double Taxation Business expansion

Proprietors Tax return No Debt finance

LP files Information return No No

Rights

Equal Mgt particip.

Equal Mgt particip

No • Debt finance • New coOwners Equal Mgt particip

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Duties Report to Powers

None • • • 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

Termination/ Dissoultion

1. Death 2. Assigning of interest

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

Duration Perpetual Existence Liabilities (Order of distribution)

Discretion of Sole proprietor No • • • • Creditors Members unpaid distributions Members capital contributions Remaining to

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members according to agreement Miscellaneous Advantages : • • • • Cost Formalities Flexibility Control • • • • • • • • • 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 Limited liability • Contracts • Torts But not for others mal practice Limited liability • Contracts • Torts (Not like share holders of a corp.)

Disadvantages : • • • Risk Finance sources Business expansion

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