LIMITED LIABILITY COMPANY (LLC) vs. PARTNERSHIP
Choosing the right business structure is crucial for protecting your assets and ensuring smooth operation. This guide compares Limited Liability Companies (LLCs) and partnerships, highlighting key differences to help you make an informed decision.
What is an LLC?
An LLC combines the flexibility of a partnership with the liability protection of a corporation. It can have one or more members who manage the business according to an operating agreement. Key benefits include:
A partnership is a business agreement between two or more people who share ownership and profits/losses. Different types exist, each with varying liability implications:
- General Partnership: Partners have unlimited personal liability for business debts.
- Limited Partnership: One general partner has unlimited liability, while limited partners have limited investment exposure.
- Limited Liability Partnership (LLP) (not available in all states): All partners enjoy limited liability.
Key Differences
| Feature | LLC | Partnership |
|---|---|---|
| Liability Protection | Limited | Varies (general, limited, LLP) |
| Management Structure | Flexible | Varies |
| Taxation | Pass-through (can elect corporate) | Pass-through |
| Formation | Articles of Organization | Partnership Agreement |
Consider these factors when deciding:
- Liability Protection: If protecting personal assets is crucial, an LLC is preferred.
- Management Structure: Choose an LLC for flexible management options.
- Taxation: If corporate tax benefits are desired, an LLC can elect S corporation status.
Acacia Business Solutions Can Help
Our experienced team assists with LLC or partnership formation, EIN acquisition, and more. Contact us for a consultation!
Contact Acacia Business Solutions today to discuss your business needs and find the right structure for you: 775-841-1876.