February 9, 2013
Limited Liability Corporation and Limited Liability Partnership Paper
Henry Ford is quoted as saying, “Whether you think you can, or think you can’t – you’re right.” He had the right idea with this thought. If you believe in yourself you are more likely to succeed in what you are working towards, if you do not believe in yourself, well than forget it. Henry Ford clearly believed in himself when he went out on that tough venture of starting his business. When you start up a company you have to select what kind of company it will be, e.g., Limited Liability Corporation (LLC) or Limited Liability Partnership (LLP).
Limited Liability Corporation (LLC) Limited Liability Corporation or LLC is described as, “a type pf business organization that offers the limited liability of a corporation and the tax benefits of a partnership (Cornell University).” This is a unique protective cover for the shareholders of the LLC. Meaning should there be any form of tax evasion or bills needing to be collected on the business side those trying to collect the debts cannot go after the shareholders for the debts of the business, in most situations. Same goes for debts being on the side of the shareholders, bill collectors have to find a different way to recover the debts, the corporation is off limits.
Limited Liability Partnership (LLP) Limited Liability Partnership or LLP is a partnership in which some or all of the partners have limited liabilities. Operates much like a limited partnership, but gives each member of the LLP protection from personal liability, except to the extent of their investment in the LLP (legalzoom, 2015). LLP also has a unique protective type hedge for the company and shareholders that are within its grasp. Because the partnership is not responsible for paying taxes as a whole, according to IRS guidelines, the possible deductions and credits are passed through the company to the partners for the taxes that they might be filing, such as income taxes. Tax Advantages is just one thing to consider when looking at whether or not to move your company into a LLC or LLP. There are several advantages and disadvantages to consider before making a decision on whether your company should go with being a LLC or LLP. A major advantage for a LLC is that there is no double taxation. This is beneficial because any profits earned are taxable at a corporate level only, the reason for this is that LLC shareholders or members are not allowed to pay themselves an actual wage.
What would I choose? Having already owned my own business for many years before selling it, I was familiar enough with the options and have made this decision before. The business I owned was a photography business. At the time of selling I had three full time photographers and was considering opening a second location before being diagnosed with a chronic pain disorder that I nearly let take over my life. I took a lot of things into