Tuesday, March 12, 2013

Serial Entrepreneur & Business Consultant Nicholas Coriano Compares The C Corp, The L.L.C & The Partnership



In the commercial and legal parlance of most countries, a general partnership (the basic form of partnership under common law), refers to an association of persons or an unincorporated company with the following major features: **Created by agreement, proof of existence and estoppel. **Formed by two or more persons **The owners are all personally liable for any legal actions and debts the company may face.



                 A Limited Liability Company (LLC) is a hybrid business entity having certain characteristics of both a corporation and a partnership or sole proprietorship (depending on how many owners there are). An LLC, although a business entity, is a type of unincorporated association and is not a corporation. The primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of pass-through income taxation. It is often more flexible than a corporation, and it is well-suited for companies with a single owner.


C corporation refers to any corporation that, under United States federal income tax law, is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately. Most major companies (and many smaller companies) are treated as C corporations for U.S. federal income tax purposes.

Shareholders of a corporation may elect to treat the corporation as a flow-through entity known as an S corporation. An S corporation is not itself subject to income tax; rather, shareholders of the S corporation are subject to tax on their pro rata shares of income based on their shareholdings.[1] To qualify to make the S corporation election, the corporation's shares must be held by resident or citizen individuals or certain qualifying trusts. A corporation may qualify as a C corporation without regard to any limit on the number of shareholders, foreign or domestic.

LLC Note:  A solid formed LLC will need an Operating Agreement.  An operating agreement is an agreement among limited liability company ("LLC") Members governing the LLC's business, and Member's financial and managerial rights and duties. Many states in the United States require an LLC to have an Operating Agreement. LLCs operating without an Operating Agreement are governed by the State's default rules contained in the relevant statute and developed through state court decisions. An Operating Agreement is similar in function to corporate by-laws, or analogous to a partnership agreement in multi member LLC's. In single member LLCs, an operating agreement is a declaration of the structure that the member has chosen for the company and sometimes used to prove in court that the LLC structure is separate from that of the individual owner and thus necessary so that the owner has documentation to prove that he or she is indeed separate from the entity itself.

FINAL THOUGHT
A partnership will keep costs down and allow freedoms that an LLC or C Corp will not.  The partnership will also leave you open to legal and personal financial liability.  The LLC will cover most basic liability as long as you do not "Pierce the Corporate Veil".  The corporation is usually the most expense to file with any State but the most likely to shield from liabilty and allow to attract big money investors.

Hope this was helpful, and meaningful comments, questions, concerns etc are greatly appreciated.

Success and nothing less,
The MicroCapCompany Team
Posted By: Nicholas Coriano 
Follow Nicholas Coriano on Twitter

........................................................

About the Author: Nicholas Coriano is a Business Consultant and Planning Guru.  He is a graduate of The University of Connecticut Business School and the John Marshall Law School in Chicago.  He has worked at Merrill Lynch, The New York Stock Exchange and as an Investor Relations Agent & Consultant to Micro Cap Companies and Penny Stocks.  He is the founder and author of The MicroCapCompany.com a blog focused on providing information and advice to Micro Cap Company Executives and Investors.  You can also find him blogging about Social Media, SEO, Web Development and Tech on PushYourRank.com

About MicroCapCompany.COM: MicroCapCompany.COM (The Blog) is a blog focused on providing articles, news and information on the micro cap sector and start-ups.  The Blog is a free service offered by Cervitude™ Investor Relations (a micro cap investor relations firm) and offers compensated research reports and business plan writing services for micro cap companies and penny stocks.  If there is a particular topic you would like to see covered on The Blog, email CervitudeNetwork@gmail.com, If you would like to advertise on The Blog, click here

Have tips, advice, comment or suggestions about this article??  Comment below or start a conversation by mentioning us on twitter!

No comments:

Post a Comment