Law HW

Issue or Consideration

Sole Prop.

General Partnership

Limited Partnership

Limited Liability Co

Subchapter “C”

Corporation

Subchapter “S”

Corporation

Liability

Unlimited personal liability

Unlimited personal “Joint and Several” liability for Partnership

Gen Partners (at least 1):unlimited liability

Limited Partners: Limited to investment

Shareholders- no personal liability beyond investment

Shareholders- no personal liability beyond investment

Ease of Formation

No formal requirements

No formal requirements

Requires formal filing

Requires formal filing

Requires formal filing and qualification and “election” with IRS

Ease of Operation

No issue

Limited concern- as agreed

ONLY General Partners operate

No participation of Limited Partners

Shared operation between Directors (major decisions) and Officers (day- to- day) and Shareholders (fundamental changes)

Shared operation between Directors (major decisions) and Officers (day- to- day) and Shareholders (fundamental changes

Taxation

No additional tax issue or burden

Partnership return with Pass through to individual partners

Partnership return with Pass through to individual partners

Possibility of double taxation

Avoids possibility of double taxation

Capitalization

Limited to loans (usually banks)

Limited to loans (usually banks)

Also have limited partner investment

Issue stock or Bonds

Issue stock or Bonds

Duration

Limited duration

Limited duration

Limited duration (gen. Partners) flexibility with limited partners

Perpetual

Perpetual

Alienation

No

No

No-General

Possible with Limited partners

Simple stock transfer

Simple stock transfer