Chapter 8 Section 3: Business Structures Flashcards
What goes into the formation of a general partnership?
Nothing. It can be formed by verbal or written agreement, or mere conduct
What liability does a general partnership have?
Unlimited personal liability for all partnership obligations
Who can manage a general partnership?
Owners manage directly or can appoint a managing partner
Is there transferability in a general partnership?
Not without unanimous consent
How does taxation work in a general partnership?
Flow through taxation
How is a limited partnership formed?
File certificate of limited partnership with state
What liability happens with a limited partnership?
General partner: unlimited personal liability
Limited partner: only investment is at risk
What does management look like under a limited partnership?
General partner: exclusive manager(s)
Limited: ordinarily does not manage
Is there transferability in a limited partnership?
Not without unanimous consent
How does taxation work for a limited partnership?
Flow through (but limited partners have passive loss restrictions)
How is a corporation form?
File articles of incorporation or corporate charter with the state
What liability comes with a corporation?
Shareholders are generally not personally liable beyond their investment
Who manages a corporation?
The Board of Directors, who appoints officers to run day-to-day operations
Is there transferability with a corporation?
Yes, unless they agree otherwise
How does taxation work with a corporation?
Income taxed at corpoate level and then again to shareholders when dividends are distributed
How are S Corps formed?
File Articles of Incorporation or Corporate Charter with the state, plus S Election
What does the liability look like in an S Corp?
Usually nothing beyond your investment
Who manages an S Corp?
The Board of Directors, who appoints the officers to run day to day operations
Is there transferability in an S Corp?
Yes, unless they agree otherwise. They can’t transfer to a foreign or entity shareholder.
What does taxation look like for an S Corp?
Flow through, but shareholders that aren’t managing have passive loss restrictions
How is an LLC formed?
File Articles of Organization with the state
What liability is there with an LLC?
Generally not liable beyond the investment
Who manages an LLC?
Members can manage directly or appoint a manager
Is there transferability in an LLC?
Unless stated otherwise, you can’t transfer without unanimous consent
What does taxation look like for an LLC?
Flow through, but non-managing partners have passive loss restrictions
How is an LLP formed?
File Statement of Qualification with state
What liability is there in an LLP?
Generally not liable for partnership obligations, unless caused by their own negligence