When starting a business one is required to make some important decisions and complete several steps. As part of the overall plan, one will need to decide on a location, business structure, and lastly, acquire the necessary licenses and permits. Common forms of business structures include sole proprietorships, limited liability corporations (LLC's), limited liability partnerships (LLP's), public and privately held corporations, and franchises. This paper will explain the roles of limited liability partnerships and corporations, and under what circumstances one would choose one instead of the other.
In deciding how one would structure a company, one would have to remember; this decision will have long-term implications and should consult with an accountant and attorney to decide which form of ownership is suitable. One would ask the following questions:What is the vision regarding the size and nature of the business?What level of control one wishes to have?What level of structure is one willing to deal with?Will the business be vulnerable to lawsuits?What are the tax implications of the different ownership structures?What are the expected profit (or losses) of the business?Would one need to reinvest earnings into the business?Would one need to access cash out of the business for oneself?Partnerships"In a Partnership, two or more people share ownership of a single business.
Like proprietorships, the law does not distinguish between the business and its owners. The partners should have a legal agreement that sets forth how decisions will be made, profits will be shared, disputes will be resolved, how future partners will be admitted to the partnership, how partners can be bought out, and what steps will be taken to dissolve the partnership when needed" (SBA.Gov).
A Limited Liability Partnership business structure is a form of ownership which each partner receives limited liability protection. An LLP and a general partnership are similar...