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Q: Advice for opening business with partners ( Answered 5 out of 5 stars,   2 Comments )
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?
Subject: Re: Advice for opening business with partners
Answered By: peggy_bill-ga on 21 Oct 2002 16:11 PDT
Rated:5 out of 5 stars

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.

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 it’s 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

The following web page addresses some of the differences between 
L.L.C., S_Corporation and C-Corporation.
Comparisons between types of incorporation

You should incorporate in your home state.

I hope this helps.
ronktheman-ga rated this answer:5 out of 5 stars
Good detail

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 doesn’t require any formalities to create

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.
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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