FORMS OF OWNERSHIP
There are two basic systems for taxing businesses:
· Corporations provide best liability protection.
· The S corp is a regular corporation with regular limited liability under state law.
· Limitation of liability makes S corp the best choice—for business reasons—over other flow-through.
· S corps are subject to a number of significant rules and restrictions.
· Ordinary partnerships, called general partnerships, do not have limited liability under state law.
· Limited partnerships limit liability for limited partners to the amount of their investments—can’t be active in management
· General partner in has unlimited liability.
· Simpler and newer than S corp—most popular form of new business
· Have limited liability features of corporations and pass-through characteristics of partnerships and S corps
· More flexible than S corps.
· Active management won’t affect limitation of liability.
· Some states don’t allow LLC with only one member.
· Designed for professional partnerships (malpractice)