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Selecting Your Business Structure – Sole Proprietorships, Corporations, Partnerships – Which is Right for You? – Part 3 Partnership or LLP?

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Selecting Your Business Structure – Sole Proprietorships, Corporations, Partnerships – Which is Right for You? – Part 3 Partnership or LLP?

Partnership or LLP : How Should I Run My Business?

In our third installment of “Selecting Your Business Structure: Which is Right for You?,” we look at the pros and cons of the partnership structure.  Should you run your business through a partnership or a Limited Liability Partnership (LLP)?

Below is a concise breakdown below of the advantages and disadvantages of each to get a clearer idea of what is best for your business. If you missed our earlier installments, read part 1 on the advantages and disadvantages of the sole proprietorship and part 2 on the advantages and disadvantages of the corporation. 

should i run my business through a partnership

The most common forms of business arrangements are a sole proprietorship or corporation. But is that the right structure for you?

In brief:

What is a limited liability partnership?
A limited liability partnership is a partnership where the partners are not personally liable for the negligent acts of other partners that is available only to accountants, lawyers and doctors.
What are the tax advantages of a partnership?
All income flows through to the partners as there is no tax paid at the partnership level. Therefore, there is not double taxation. This also means that excess income will not be shielded from tax.
What is the main disadvantage of a partnership?

Each of the partners is jointly liable for the debts of the business. Therefore, if a partnership incurs debts greater than its assets, creditors can look at the personal assets of the partners.

 

Click here for more information about each type of structure.

-Shira Kalfa, BA, JD, Partner and Founder

© Kalfa Law 2018

The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.

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