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Subject:
Advice for opening business with partners
Category: Miscellaneous Asked by: ronktheman-ga List Price: $2.00 |
Posted:
21 Oct 2002 13:42 PDT
Expires: 20 Nov 2002 12:42 PST Question ID: 86111 |
I am going to open a business under my name with two other partners. Is there any benifit to opening this business under all three of our names? In perticular, will the partners have the same tax benifits and conswquences if the business is under my name? Should we open a corporation (LLC) and only have the business under my name? |
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Subject:
Re: Advice for opening business with partners
Answered By: peggy_bill-ga on 21 Oct 2002 16:11 PDT Rated: |
Hello, If all three individuals are legally equal partners in the business, then they will all have the same advantages and consequences. Their names do not have to be included in the name of the business for them to be equal partners in the business. If, however, you are listed as the only partner, then they do not have the same benefits or consequences as you would. There are very real advantages to forming a Limited Liability Corporation (LLC). The biggest one is, of course, limited liability. In a partnership all partners are personally liable for any debts that the business incurs. If a LLC is formed than the owners are not personally liable. Limited Liability. http://www.4inc.com/limited.htm Forming your business into a LLC is a very good idea. If you do, your business will exist separately from all owners, i.e. you will not be personally liable. You can create it by filing with the proper state authority and paying all fees. Typically, each state imposes its own additional pre or post-creation requirements. It is not a partnership or a corporation, but it combines the advantages of both. It has the limited liability of a corporation, and pass-through taxation of a partnership. This page describes the different types of entities that you might consider if you want to have limited liability for you and your partners. Choices http://4inc.com/choices.htm The following web page addresses some of the differences between L.L.C., S_Corporation and C-Corporation. Comparisons between types of incorporation http://www.4inc.com/compare.htm You should incorporate in your home state. http://www.4inc.com/hmstate.htm I hope this helps. pba |
ronktheman-ga
rated this answer:
Good detail |
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Subject:
Re: Advice for opening business with partners
From: peggy_bill-ga on 24 Oct 2002 20:50 PDT |
I don't know if ronktheman will look back and see this comment, but I did want to add something. The type of partnership that I was referring to in my answer is called a General Partnership. It doesnt require any formalities to create it. There are two other types of Partnerships LIMITED PARTNERSHIP: It requires the filing of very specific paperwork. It has one general partner who has unlimited personal liability. But, it can have a number of limited partners who are only liable up to their capital investment. However, the limited partners cannot be active in management. LIMITED LIABILITY PARTNERSHIP: Similar to the limited partnership, but it does not have a general partner. All partners are not personally for the partnership. This is usually for small professional offices, such as a clinic with several doctors. This information came from Business Law, by Henry R. Cheeseman. Prentice Hall (2001). I felt the need to add these. I hope it helps. pba |
Subject:
Re: Advice for opening business with partners
From: ronktheman-ga on 25 Oct 2002 17:02 PDT |
So will a general partnership protect us from personal liability. I guess now I am confused about the difference between a general partnership and limited liability partnership. |
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