SOLE PROPRIETORSHIP
This is the simplest entity to establish for a single owner,
typically requiring only state fees to obtain a business
license to get going and few, if any, recurring fees. Tax
preparation is relatively easy, as all income is treated as
personal income. Easy setup and maintenance is offset,
however, by lack of incorporated income tax benefits and
exposure of personal assets to business liabilities??”for
example, if your business is sued, so are you!
PARTNERSHIP
Easy to set up and maintain, a partnership agreement
should be crafted to consider all eventualities, including
dissolution, departure of a partner (this can be tricky; it??™s
good to think things through early), and management
control. The main difference between general and limited
partnerships is the classification and liability of members:
??? General partnerships are comprised of two or
more members who share individual responsibility
for taxes and liability of the business concern.
??? Limited partnerships provide for two classes of
partners: general and limited. General partners
share similar responsibilities to those in a general
partnership. Limited partners do not share in
the management of the partnership and are not
personally liable for any more than their individual
investments in the company.
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