Question

For a fictitious company you want to start—Analyze the benefits of being an LLC, Partnership or Corporation (3 Pages)

Answer 1

L.L.C and its benefits

It is a limited liability company where the liabilities of the members of the company is limited. The company is itself responsible for the liabilities incurred and the members of the L.L.C cannot be held personally liable for debts.
It is a combination of both corporation and partnership though it is neither of them.

Advantages of L.L.C

Tax advantages : For L.L.C tax of both business and LLC are not seperatly calculated. The IRS does not see business and company saperate for taxation. The business profits becomes members income.
Liabilities are limited : These companies provides full exemption from personal liability for business obligations. Company is only responsible for its liabilities.
Profit Distribution : LLC have to freedom to distribute profits in any ratio.
No Legal Requirement : There is no legal requirement to conduct general meetings, maintain minutes etc.

Partnership : It is a form of organization where the partners have unlimited liability. Profits are distributed amoung partners in a pre determined ratio as per agreement.

Advantages

Capital : With many partnets the agreement of capital for business can be huge.
Profits and loss Sharing : In partnership the profit and loss sharing ratios are pre-defined.
Easily Formed : Partnership firm can be easily formed as compared to other corporationas their is no legal regulations.
Flexibility : The business is more flexible and partners can introduce any amount of capital they desire.

Corporation : It is a legal organization owned by a large number of members, who are shareholders and holds shares as ownership evidance. It has to follow various legal regulations.

Advantages

Perpetual life : The life of an entity is not limited. It can work for generations.
Common Seal : Corporation have a common seal which is used as an signature of an entity.
Ownership : The shareholders can easily pass their ownership to others by share transfer.
Limited Liability : The liability of the shareholders is only for a limited amount.