© 2011 Cengage Learning. Disclosures Disclosures Chapter 4 © 2011 Cengage Learning.
Copyright 2010 by South-Western/Cengage Learning Chapter 13 Forms of Doing Business.
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Copyright 2010 by South-Western/Cengage Learning Chapter 13 Forms of Doing Business
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Transcript of Copyright 2010 by South-Western/Cengage Learning Chapter 13 Forms of Doing Business.
Copyright 2010 by South-Western/Cengage Learning
Chapter 13 Forms of Doing Business
Copyright 2010 by South-Western/Cengage Learning13-2
Comparison of Comparison of Business Business OrganizationsOrganizationsForm Formation Funding Management
Sole proprietorship
Partnership
Limited partnership
Corporation
S corporation or Subchapter S
Limited liability company (LLC)
Limited liability partnership
No formal requirements
Articles of partnership
Filing of articles of partnership
Formal filing of articles of incorporation
Same as above (special IRS filings)
Formal filing – articles of organization
Filing of articles of limited liability partnership
Individual provides funds
Capital contributions of partners
Capital contributions of general and limited partners
Debt (bonds)/equity (shareholders)
Same as above
Capital contributions of members
Capital contributions of partners
Individual
All partners or delegated to one
General partner
Board of directors, officers and/or executive committee
Same as above
No centralized management; all members manage or delegate to one member
All partners or delegated to one
Copyright 2010 by South-Western/Cengage Learning13-3
Comparison of Comparison of Business Business OrganizationsOrganizationsForm Transfer Control Taxes
Sole proprietorship
Partnership
Limited partnership
Corporation
S corporation or Subchapter S
Limited liability company (LLC)
Limited liability partnership
No transfer
Transfer interest but not partner status
Same as partnership (except RULPA)
Shares (with reasonable restrictions) are easily transferred
Restrictions on transfer to comply with S corporation
No transfer without consent of the majority
No admission without consent of majority
Individual pays on individual return
Partner takes profits and losses on individual return (flow-through)
Same as partnership
Corporation pays taxes; shareholders pay taxes on dividends
Shareholders pay taxes on profits; take losses
Flow-through treatment
Flow-through treatment
Copyright 2010 by South-Western/Cengage Learning13-4
Comparison of Comparison of Business Business OrganizationsOrganizationsForm Termination Liability
Sole proprietorship
Partnership
Limited partnership
Corporation
S corporation or Subchapter S
Limited liability company (LLC)
Limited liability partnership
Death; voluntary
Dissolution upon death; withdrawal of partner
Same as partnership
Dissolved only if limited in duration or shareholders vote to dissolve
Same as above
Dissolved upon death; bankruptcy
Dissolved upon death, bankruptcy
Individual
Partners are personally liable
General partner is personally liable; limited partners liable to extent of contribution
No shareholder personal liability unless(1) Watered or (2) Corporate veil
Same as above
Limited liability – only liable to extent of capital contribution
Varies by state, but liability for acts of partners is limited in some way
