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Limited Partnerships, LLCs and Corporations

Provided by Buzgate.org Small Business Resource Referral Network, content partner for the SME Toolkit.
  LIMITED PARTNERSHIPS LIMITED LIABILITY COMPANIES CORPORATIONS
Formation •  file registration with Secretary of State for a fee
•  EIN
•  partnership agreement
•  there is an application fee for certificate
•  file registration with Secretary of State for a fee
•  securities form
•  EIN
•  operating and management agreement
•  annual report fee
For cost-effective, efficient, online filing assistance, visit www.BizFilings.com
•  file registration with Secretary of State for a fee
•  securities form
•  EIN
•  S election (for S Corporations)
•  bylaws/shareholders agreements
•  annual report fee
For cost-effective, efficient, online filing assistance, visit www.BizFilings.com
Management and Control •  general partners
•  may be delegated to manager or retained by members
•  board of directors or shareholders
Liability of Owner(s) general partners
•  joint and several limited partners
•  limited to investment
•  limited to investment
•  limited to investment
Ability to Raise Capital •  limited by collective wealth and contributions of partners and overall value of business
•  securities laws apply to sales of securities
•  limited by wealth of participating members and overall value of business
•  securities laws apply to sales of securities
•  limited by wealth of participating shareholders and overall value of business
•  securities laws apply to sales of securities
Federal Taxation of Entity •  pass through
•  pass through
•  C Corporation - double taxation
•  S Corporation - pass through
Transferability of Ownership Interest •  limited partners can transfer, subject to securities laws issues and partnership restrictions
•  general partner transfer causes technical dissolution unless limited partners agree to continuation
•  freely transferable interests, subject to restrictions in agreement
•  shares freely transferable subject to shareholder agreement and securities law concerns
Fringe Benefits •  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
•  C Corporation - deductible to corporation; excluded from employee's gross income
•  S Corporation - for 2% or greater shareholder (same as partnership)
Deductibility of Losses •  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
•  C Corporation - no shareholder deductions; loss carries forward
•  S Corporation - deductions available subject to at-risk rules, PAL's and basis. Loans to entity do not affect basis.
Availability of Special Allocations •  available
•  available
•  not available
Basis Adjustments at Death •  inside and outside basis increases - See § IRC 754
•  inside and outside basis increases - See § IRC 754
•  basis in shares step up but not inside basis of asset
Eligibility to be an Equity Holder •  no limitations
•  no limitations
•  C Corporation - no limitations
•  S Corporation - significant limitations; i.e., maximum of 75 shareholders

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.

Copyright (c) Knowledge Institute, Inc., 11 Court Street, Exeter, NH 03833, USA
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