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Partnerships vs. Llc

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Partnerships vs. LLC
An LLC is a better way to operate a business than a partnership. While LLCs and Partnerships do share some similar advantages and disadvantages, the LLCs ability to protect its members make it the superior business model.
Limited Liability Companies are a hybrid. They share some of the same advantages of both the corporation and partnership (Reed,445). Corporations exist mainly to shield shareholders and owners from the liabilities of the company. The profits of the corporation are taxed both at the corporate level and on dividends. Limited liability companies are treated as nontaxable entities, much like partnerships. Partnerships are like the opposite of a corporation. At least one person must be responsible for company debts and litigation, but profits go directly to owners avoiding the "double taxation." Limited liability corporations offer limited liability protection to owners and members, and profits go directly to the members. Because an LLC is essentially the ideal business structure, many new businesses form as one.
In an LLC owners are not personally responsible for company debts. This is the most important attribute of an LLC. In a partnership, the owners are personally responsible for business debts. If the assets of the partnership cannot satisfy the debt, creditors can go after each owner's personal bank account, house, etc., to make up the difference. By contrast, if an LLC runs out of funds, the owners are usually not liable.
In 1988, the IRS changed its code so LLCs could be taxed as a partnership (Reed, 444). In fact, an LLC can choose whether it wants to be taxed as a corporation or partnership. According to, the federal government, an LLC is not a separate tax entity so the business itself is not taxed. This means all of its members will pay income tax on their personal income. While the federal government does not tax...

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