Limited Partnership and Corporation

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ADVANTAGES OF A LIMITED PARTNERSHIP: * Being a limited partner puts a limitation on liability with respect both to potential lawsuits and money; the limited partner is only going to be liable for the amount of capital it contributed to the business; a business creditor cannot come after the limited partner’s personal assets. * Easier to attract investors because limited partners have limited liability to the business debts. * Profits and losses pass through the business to the partners, who are taxed on their own personal income tax returns. * Limited partners get to share in the profits and losses without having to participate in the business itself.

* Liability of limited partner is set at the partner’s capital contribution, but a limited partner may not take active role in management. * Limited Partnership Definition: A partnership with at last one general partner and a limited partner, the latter contributing financially or otherwise but not otherwise involved in the business or, generally, personally liable for the debts of the partnership.

DISADVANTAGES OF A LIMITED PARTNERSHIP: * If the limited partner becomes active in the business he or she may have general-partner personal liability. * if a limited partner interferes with the running of the business, they risk losing their limited partner status with consequential personal exposure to the debts of the partnership. * General partner is personally fully liable for the debts of the business. * Certificate of Limited Partnership must be filed with the state before the partnership comes into existence, which includes state filing fees.
A corporation is a separate legal and tax entity created by individuals (shareholders) who offer money, property or both for the corporation’s capital stock. The corporation remains separate from those who manage and…...

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