Sole, General and Limited Liability Partnerships

Provided by Buzgate.org Small Business Resource Referral Network, content partner for the SME Toolkit.

	SOLE PROPRIETORSHIP	GENERAL PARTNERSHIPS	LIMITED LIABILITY PARTNERSHIP
Formation	• no statutory requirements • trade name application • EIN (if you have employees)	• no direct statutory rqmts. • trade name application • EIN • partnership agreement	• file registration with Secretary of State for a fee • EIN • partnership agreement
Management and Control	• proprietor has sole management authority	• shared by partners	• shared by partners
Liability of Owner(s)	• unlimited	joint and several • insurance • contract	• limited on tort claims; joint and several for contract claims
Ability to Raise Capital	• limited to wealth and borrowing capacity of proprietor	• limited by collective wealth and contributions of partners and overall value of business	• limited by collective wealth and contributions of partners and overall value of business
Federal Taxation of Entity	• taxed at individual level	• pass through	• pass through
Transferability of Ownership Interest	• no equity interests to transfer or sell	• transfer causes technical dissolution	• transfer causes technical dissolution
Fringe Benefits	• must be included in income; up to 40% deductible for health insurance with % increasing	• must be included in partner's taxable income; up to 40% deductible; percent of deductibility increasing	• must be included in partner's taxable income; up to 40% deductible; percent of deductibility increasing
Deductibility of Losses	• deductibility aginst income, subject to at-risk rules, PAL's basis	• deductibility against income, subject to at-risk rules; PAL's and basis; basis inceases for loans to entity	• deductibility against income, subject to at-risk rules; PAL's and basis; basis inceases for loans to entity
Availability of Special Allocations	• N/A	• available	• available
Basis Adjustments at Death	• step up	• inside and outside basis increases - See § IRC 754	• inside and outside basis increases - See § IRC 754
Eligibility to be an Equity Holder	• N/A	• no limitations	• no limitations

Note: This information is presented to provide a general overview of small business options and related services. It is not intended to be an exhaustive representation. Data has been compiled by the Knowledge Institute for informational purposes only. Content is provided on an "as is" basis and is not intended to, nor does it, provide advice or create a customer relationship between the Knowledge Institute, BUZGate and/or any other organization named herein, and any reader.

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