Limited Liability Corporation and Partnerships

FIN/419

December 19th, 2011

James Hagist

There are multiple legal forms of business, each developed and selected by business owners depending on the needs of that business. Each legal form of a business has specific ownership and taxation laws and regulations that assist business owners in making the decision on which selection to make. Among the three most common legal forms of business are partnership and corporation. This paper intends to explain the roles of limited liability corporations and limited liability partnerships.

A corporation is a business that has been given rights that an individual has by the government. Limited liability corporations are companies that limit the liability of its participants by the assets in which they contributed to the organization. This means that the business can be sued by an individual or another business and can lose its gained assets. Although a limited liability corporation and its individuals can be sued, the limited liability portion ensures that an individual cannot lose more than they have invested in the company.

A Limited liability corporation provides its owners with the opportunity to partake in limited liabilities and taxation like partnerships can. This type of business is good for business ventures involving two people. Owners of a limited liability corporation are called members. Members often include individuals, corporations, and other limited liability companies. There is no maximum number of members that can be involved with a limited liability corporation, and most states allow single member limited liability corporations. Limited liability corporations appoint a Board of Directors who is responsible for developing strategic goals, plans, policies, hiring, firing, and compensation