using the template provided, fill in the comparison of business ownership forms.

Question

using the template provided, fill in the comparison of business ownership forms.

Sole Proprietorship

General Partnership

Limited Partnership

Corporation

S Corporation

Limited Liability Company

Limited Liability Partnership

Business Documentation

(What documents are required to form the following business structures)

Ownership

(Who owns the company?)

Liability of Owners

(Who is responsible for bankruptcy or if you get sued?)

Profits and

Losses

(where do the profits and losses go)

Taxation

(Who is the person or thing that gets taxed? Is their double taxation?)

Sole Proprietorship

General Partnership

Limited Partnership

Corporation

S Corporation

Limited Liability Company

Limited Liability Partnership

Business Documentation

(What documents are required to form the following business structures)

Ownership

(Who owns the company?)

Liability of Owners

(Who is responsible for bankruptcy or if you get sued?)

Profits and

Losses

(where do the profits and losses go)

Taxation

(Who is the person or thing that gets taxed? Is their double taxation?)

Explanation / Answer

Business Documents

Profits and Losses

Taxation

Sole Proprietorship General Partnership Limited Partnership Corporation S Corporation Limited Liability Company Limited Liability Partnership

Business Documents

Seller's permit or vendor's license in state ID card, drivers license, business permit Agreement between both the partners, personal details of the partners, company does not have to be notarized, business license, permits Same as that of the general partnership. But the company has to be registered under notary or in the company register portal of e-business register, business license, permits Certificate of incorporation or articles of incorporation, shareholder agreement, share certificate for each shareholder, IRS form SS4, business license, permits Should be filed as corporation first. Shareholders agreement, signed form 2553, business license & permits Operating agreement, articles of formation, member certificate of each member, IRS form SS4, business license, permits Business operating agreement, business license, permits, IRS form SS4, State ID number, certificate of LLP Ownership Owned and managed by single person only Owned by two or more people and are active in the day-to-day activities Limited partnerships have at least one partner who are active in day-to-day operations, and rest are called passive partners or limited partners who invest in the business and have minimal control over daily activities. Limited partners do not run the business Corporations are formed by a group of shareholders who have the ownership of the corporation. It is represented by their holding of the common stock. It is a closely held corporation incorporated by the shareholders. Not more than 75 shareholders are allowed.   Similar to S Corporation but without special eligibility requirements. Two or more partners Liability of owners Unlimited Liability. Sole owner is completely responsible in case of debts. His assets are evaluated in case of bankruptcy. Unlimited liability. All the partners are liable for any kind of debts. Liability lies with the general partners. Limited partners can only lose their investment in the business. But general partners of limited partnership is liable to pay the debts. Limited liability. Limits the personal liability of the owners for the business debts. Limited liability. Limits the personal liability of the owners Limited liability. Limited liability to all the partners

Profits and Losses

Both profits & losses are entitled to the sole owner. Shared by all the partners Profits & loses are shared completely by the general partners. Limited partners only share profits, losses are limited to the extent of their investment Profits and loses are belong to corporation. Profits may be distributed to the share holders in the form of dividends. In case of loses, corporation is responsible and it affects the stock price and the investor. Profits and losses flow through to shareholders in proportion to their share holdings. Allocated among the members in proportion to the value of their contributions profits and losses are passed through to each partner and reported on each individual's tax return

Taxation

No special taxes. Profits of the business are taxed as the personal income of the owner. Separate business returns has to be filed Tax has to be paid by the individual on the shared profits. Tax has to be paid by the individual on the shared profits. Corporation has to pay large percentage of its profits to state and federal taxes. If corporation distributes some of its earnings as dividends to the stockholders, then stock holders will again have to pay taxes on it - Double taxation Not taxed on its profits. The shareholders are taxed on their proportional shares of S Corporation's profits It is called as pass-through entry by IRS. Based on the number of the owners IRS treats LLC as sole proprietorship or partnership for the tax purposes Just like corporations, Entity is taxed and then taxes are levied on the individual distributions.

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